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The Commonwealth of Massachusetts 

Stale Li husatfrs 

Slate bL , Boston 




Final Report 

To The General Court 

Of The Special Commission 

Concerning State And County Buildings 



December 31, 1980 



Created by 
Chapter 5 of the Resolves of 1978 
MR as amended by Chapter 1 1 of the Resolves of 1979 

93M3 and by Chapter 257 of the Acts of 1980. 

980 V\ 



c.2 



VOLUME 1 






j -J J-ilJ 




francis x. beilotti 
frances burke 
peter forbes 
daniel o. mahoney 
Walter j. McCarthy 

JOHN WILLIAM WARD (Chairman) 
LEWIS H. WEINSTEIN 
BANCROFT LITTLEFIELD, JR. 
(Chief Counsel) 



orate Liorary 

State Hl 
Eh? (£mmt\mwmlt\f at MaflaarljuBdtB 



State, Hop^e, Boston 



SPECIAL COMMISSION CONCERNING STATE AND COUNTY BUILDINGS 
JOHN W. McCORMACK STATE OFFICE BUILDING, ROOM 1601 
ONE ASHBURTON PLACE, BOSTON 02108 
Telephone (617) 727-1270 



December 31, 1980 



Mr. Wallace C. Mills 

Clerk of the House of Representatives 

State House, Room 145 

Boston, MA 02108 

Dear Mr. Mills: 

Enclosed for filing today is the Final Report of the Special 
Commission Concerning State and County Buildings. The participation 
of the Attorney General in this Eiling is limited in accordance with 
his separate views in Volume IX. 





iter J. 4lcCarthy A 




hn William Ward 
Lewis H. Weinstein 



rsl 
Enclosure 






o 







QIIj? (Eommxmntfalilj of Hassarljus^lts 

SPECIAL COMMISSION CONCERNING STATE AND COUNTY BUILDINGS 
JOHN W. McCORMACK STATE OFFICE BUILDING, ROOM 1601 
ONE ASHBURTON PLACE, BOSTON 02108 
Telephone (617) 727-1270 

francis x. bellotti 
frances burke 
peter forbes 
daniel o. mahoney 
Walter j. McCarthy 

JOHN WILLIAM WARD (Chairman) 

LEWIS H. WEINSTEIN 

BANCROFT LITTLEFIELD, JR. _. 

(Chief counsel) December 31, 1980 

The Honorable William M. Bulger 
President of the Senate 
State House, Room 3 30 
Boston, Massachusetts 2133 

The Honorable Thomas W. McGee 

Speaker of the House of Representatives 

State House, Room 356 

Boston, Massachusetts 02133 

Dear Mr. President and Mr. Speaker: 

We have today delivered to the Clerks of the Senate 
and the House the Final Report of the Special Commission 
Concerning State and County Buildings. With its submission 
the Special Commission comes to an end. It has been a long 
and arduous experience, but I speak for all the Commissioners 
and their staff, when I say it has truly been a privilege and 
a pleasure to have served the General Court and the people of 
the Commonwealth of Massachusetts. 

With literally my last words as Chairman of the Special 
Commission, I wish especially to give public praise to my 
fellow commissioners who have given their time and their 
talent freely in public service. We have been deeply involved 
together now for more than two years. It has been humanly 
satisfying as well as professionally rewarding to have been 
their Chairman. 

In any enterprise as complex as the work of the Special 
Commission, one depends on many others. The Commissioners 
believe they have had the benefit of the finest professional 
investigative and legislative staff to have been assembled in 
the history of the Commonwealth. We owe them much. We are in 
debt to many others, too, and our "Acknowledgements" of their 
help is, we know, insufficient to express our gratitude. But 
I wish especially, as we submit our final report to you, to 
thank you for your ready availability whenever the need arose. 
There have been differences between us, to be sure, but they 
never diminished your public responsibility toward the Commission 



li 



The Honorable William M. Bulger 
The Honorable Thomas W. McGee 
December 31, 1980 
Page 2 



Since it is the last day of 1980, as well as the last 
day in the life of the Special Commission, may I wish you 
a good new year. 

Cordially,. 

/ John William Ward 
JWW:mec 




in 



1 V 

ANALYTICAL TABLE OF CONTENTS 

VOLUME I 

FOREWORD 

Letter of Transmittal to the Clerk of the House of Representatives i 

Letter of Transmittal to the President of the Senate and the Speaker 

of the House of Representatives ii 

AnalyticalTableofContents iv 

Volume I 

Foreword iv 

Volume II 

Report on the Investigation of MBM and Related Entities vi 

Vol ume 1 1 1 

Description of Findings in Individual Cases: Award of Design Contracts 

A New Campus for Holyoke Community College xi 

Masiello: If a Hand Is Open xiii 

Volume IV 

The Award of Design Contracts: an Overview xvi 

Desmond & Lord, Inc. xviii 

Volume V 

Suppliers xx 

Influence Exercised on Administrative and Legislative Action xxii 

Laundering Improper Campaign Contributions xxiii 

Cash Generation and Case Studies xxiv 

Volume VI 

Construction Defects: State and County Buildings xxv 

Volume VII 

Systems Issues and Findings 

The System of Public Construction in Massachusetts xxvi 

Volume VIII 

Systems Issues and Findings 

The System of Public Construction in Massachusetts (conclusion) xxx 

Campaign Finance xxxiii 

Detecting and Preventing Fraud xxxv 

Pilot ing the Legislation xxxv 

The Special Commission in Court xxxvi 

Volume IX 

The Commission's Narrative xxxvi i 

Separate View xl 



Volume X 

Footnotes for Volumes III, IV, V, VI, and IX 
Volume XI 

Documentary Appendices to Volumes II, III, IV, V, and VI 
Volume XII 

Footnotes and Appendices to Volumes VII and VIII 
Members of the Special Commission Concerning State and County Buildings 
Francis X. Bellotti 
Frances Burke 
Peter Forbes 
Daniel 0. Mahoney 
Walter J. McCarthy 
John William Ward 
Lewi s H . Wei ns tei n 
Acknowl edgments 

What We Have Learned: the Costs of Corruption 
I . What Have We Learned? 

Corruption as a Way of Life 

Political Influence in Doing Business with the State 
Shoddy Work and Debased Standards 
The "System" of Administration 
II. What Have We Proposed to Do? 
Ill . What of the Future? 



xli 

x 1 i i 

x 1 i i i 

1 
2 
3 
4 
5 
6 
7 
9 
19 

21 
24 
27 
31 
33 
40 



VI 



VOLUME II 



REPORT ON THE INVESTIGATION OF MBM AND RELATED ENTITIES 



TABLE OF CONTENTS 



CHAPTER 


I 




CHAPTER 


II 








A 






B 






C 






D 






E 






F 



Why the Commission Investigated Matters Relating to MBM 

Corporate Overview of MBM 

The Formation and Early History of MBM 

The Unsuccessful Attempt in 1969 to "Go Public" 

The Acquisition in 1971 of MCM 

The Combining in 1972-73 with IMS 

The Separation in 1975 from IMS 

The Termination of MBM in 1978-79 



5 

5 

6 

8 

12 

15 

15 



CHAPTER III 



MBM's Activities in Massachusetts prior to 1969 

A. Activities during the Peabody Administration (1963-64) 

B. Activities during the Volpe Administration (1965-68) 



17 
17 
21 



CHAPTER IV 



MBM's Procurement of the UMass/Boston Project Management 
Contract 

A. Introduction 

B. MBM's Decision in Late 1968 or Early 1969 to Make a Major 
Effort to Win Large Public Contracts in Massachusetts 

C. MBM's Attempts to Win a Contract to Provide a Management 
Information System for the BBC 

D. The Commonwealth's Decision to Use an Outside Project 
Management Firm on the UMass/Boston Project 

E. MBM's Initial Awareness of the Potential UMass/Boston 
Project Management Contract 

F. Issuance of the Formal Request for Proposals by the 
Designer Selection Board 

G. MBM's Decision to Have Former Governor Endicott Peabody 
Assist in MBM's Efforts to Obtain the UMass/Boston Contract 

H. The Fee Arrangement Between MBM and the Peabody Firm 

I. The October 1, 1969 Meeting of Peabody and MBM's Officers 
Regarding the UMass/Boston Contract 

J. The Formal Procedure by Which the UMass/Boston Project 
Management Contract Was to Be Awarded 



26 

26 
27 

29 

34 

42 

44 

47 

51 
52 

53 



VI 1 



K. Peabody's Early Contacts with UMass Officials 56 

L. Peabody's Early Contacts with BBC Officials 58 

M. Activities by MBM Officials during October and 60 

November 196 9 

N. The Short-lived Seelye-McKee Joint Venture Proposal 62 

0. Interviews of Five Semi-Finalists by the Designer 6 3 

Selection Board 

P. Endicott Peabody's Discovery of, and Response to, 65 

a Conflict of Interest 

Q. The DSB's Selection of Three Finalists on 71 

December 17, 1969 

R. The Alleged Meeting of Endicott Peabody and Deputy 73 

A&F Commissioner Albert H. Zabriskie on December 18 or 19, 
1969 

S. The Alleged Meeting of MBM Vice President Anthony Mansueto 76 

and MBM Salesman Martin Heyman with A&F Commissioner 
Donald Dwight on December 19, 1969 

T. The MBM Christmas Party in New York on December 19, 1969 79 

U. The "Kick-off Meeting" for the UMass/Boston Project 81 

on Monday Morning, December 22, 1969 

V. Donald Dwight' s Selection of MBM as the Winner of the 83 

UMass/Boston Project Management Contract 

W. Dwight 's Selection of Haldeman & Goransson for One 85 

of the UMass/Boston Architectural Contracts 

X. Governor Francis W. Sargent's Knowledge or Lack of 89 

Knowledge of the Award of the UMass/Boston Project 
Management Contract 

Y. MBM Vice President Anthony E. Mansueto 's Testimony 90 

About the UMass/Boston Contract 

CHAPTER V Evidence Relating to Whether MBM Obtained the UMass/Boston 9 4 

Contract Through a Corrupt Agreement 

A. Introduction 94 

B. Evidence that Contracts Were Awarded by the Volpe and 9 4 
Sargent Administrations in Return for Prior Commitments by 

the Winning Firms to Make Illegal Cash Payments 

C. Evidence that MBM Officials Admitted to Others that MBM 98 
Made a Commitment to Pay Casn to Manzi in Connection with 

the UMass/Boston Contract, and that Manzi Repeatedly 
Complained that MBM Was Slow in Living up to Its Commitments 
on the UMass/Boston Contract 

1. Testimony of Frank R. Masiello, Jr. 98 

2. Testimony of William V. Masiello 101 

3. Testimony of Daniel J. Shields 101 



VI 1 1 



4. Testimony of William F. Harding 102 

5. Testimony of Stanley Davis 102 

6. Affidavit of Maurice Khoury 103 

D. Evidence that MBM Generated Tens of Thousands of Dollars 10 3 
in Cash for Payment to Politicians 

1. Cash Generation and Questionable Accounting 104 
Practices by MBM 

2. Alleged Cash Generation for MBM by Maurice Khoury 110 

E. Evidence That MBM Paid At Least $30,000 in Cash to Republican 114 
Fundraiser Albert Manzi After MBM Won the UMass/Boston Contract 

1. The October 16, 1970 Payment to Fundraiser Albert Manzi 114 

2. The Alleged Payment to Manzi in February 1972 117 

3. The May 18, 1972 Parker House Meeting and MBM's May 23, 119 
1972 Payment to William Masiello for Manzi 

F. Conclusion 124 
CHAPTER VI The Terms of MBM's UMass/Boston Contract, i26 



MBM' 


5 


Anticipated 


Profit 


and 


MBM 


5 


Performance 


on 


the 


Contract 



A. Terms of the Contract 126 

B. MBM's Anticipated Profit 130 

C. MBM's Performance 131 

CHAPTER VII Challences to MBM's UMass/Boston Contract 135 

A. The Bill Filed by Rep. Tnomas F. Fallon in 1970 135 

B. The Newspaper Articles in 1971 Criticizing MBM's 140 
UMass/Boston Contract 

C. The Investigation in 1971 by a Special Legislative Committee 147 
Chaired by Senator Joseph J.C. DiCarlo and Representative 

Ralph L. Sirianni, Jr. 

1. The Filing of an Order by DiCarlo, Sirianni, and 147 
Representative William F. Hogan Calling for an 

Investigation of MBM's UMass/Boston Contract 

2. The February 1971 Meeting at DiCarlo 's Home 149 

3. Changes in the Wording of the Order Calling for an 152 
Investigation of MBM's UMass/Boston Contract 

4. MBM's Discussions with Kelly about the 15 3 
DiCarlo-Sirianni -Hogan Legislation 

5. The Selection of Members for the Committee 1^7 



6. MBM's Purchase of Tickets for House Speaker 
3artlev's "Brunch" 



160 



7. The Investigation Conducted by the DiCarlo-Sirianni 16 2 

Committee 

3. The First Draft of the DiCarlo-Sirianni Committee 170 

Report 






1 X 



9. The Intercession of Senator Ronald C. Ma'cKenzie and 
the Changing of the DiCarlo-Sirianni Committee Report 

10. Payments Made by MBM to DiCarlo and MacKenzie 

11. DiCarlo 's Visit to MBM's New York Office 

The Investigation in 1972-73 by Auditor Joseph A. Davey 
of the Post Audit Bureau 



176 

188 

198 

202 



CHAPTER VIII 



B. 



D. 

E. 
F. 
G. 



The Investigation, Prosecution, Appeals, and 

Post-Trial Motions of Joseph DiCarlo and Ronald MacKenzie 

The Investigations of MBM in Philadelphia Which Led 
to the First Allegations About DiCarlo and MacKenzie 

The Forwarding of the DiCarlo-MacKenzie Allegations to 
the Boston Office of the Federal Bureau of Investigation 

The First Knowledge by DiCarlo and MacKenzie that They 
Were Being Investigated 

Events Leading to the DiCarlo-MacKenzie Indictments 

The DiCarlo-MacKenzie Trial 

Post-Trial Proceedings and Allegations 

Attempts to Induce MacKenzie Not to Implicate DiCarlo 



208 
208 

211 
213 

214 
216 
220 
228 



CHAPTER IX 



The Manzi-Masiello Trial in 1979 

A. Events Preceding the Manzi-Masiello Trial 

B. The Trial and Acquittals 

C. Masiello's Admission to the Commission that Masiello 
Committed Perjury at the Manzi-Masiello Trial; Masiello's 
Allegation that Manzi Also Committed Perjury at the 
Manzi-Masiello Trial; Related Allegations 



233 
233 
236 

240 



CHAPTER X 



Activities in Massachusetts of William F. Harding and 

Daniel J. Shields at Times When They Were Not Working for MBM 

A. Why the Commission Has Investigated the Activities in 
Massachusetts of Hardina and Shields at Times When 
Harding and Shields Were Not Working for MBM 

B. Activities of Harding and Shields in Massachusetts 
Prior to Joining MBM 

C. Efforts bv Hardina and Shields to Win Public Contracts 
Through Essex County Commissioner Daniel J. Burke 

1. Initial Contacts Between Harding and Burke 

2. The MacKenzie-Tullv Bill 

3. Burke's Agreement to Helo Harding and Shields 
Obtain Essex Countv Contracts 

4. The Formation of PCM 

5. The BBC's Position Regarding Use of PCM bv 
Essex Countv 



242 
242 

244 
249 

249 
251 
252 

254 
256 



6. Essex County Contracts Awarded to PCM 

7. Payments to Burke by PCM Officials 

8. The Refusal by Essex County Treasurer 
Thomas F. Duffy to Pay PCM's Invoices 



260 
262 
265 



CHAPTER XI 



Conclusion 



269 



APPENDICES 



A. The Fee Arrangement Between MBM and the Peabody Firm 

B. Evidence Bearing on MBM's Activities in Other States 

C. MBM's Attempt to Win a Project Management Contract for the 
UMass/Worcester Medical School 

D. MBM's Attempts to Win Contracts Regarding the Middlesex 
County Courthouse 

E. MBM's Successful Efforts Regarding Its "Delay Claim" in 1972 

F. MBM's Fee for Work at the Worcester Countv Jail 



A-l 

A-16 

A-29 

A-35 

A-40 
A-<.8 



XI 



VOLUME III 



DESCRIPTION OF FINDINGS IN INDIVIDUAL CASES: AWARD OF DESIGN CONTRACTS 



TABLE OF CONTENTS 



A New Campus For Holyoke Community College 
Background of the Holyoke Project 
The DMJfl/ Mas i el lo Relationship 

DMJM's Interest in Massachusetts 

"An Architect Who Was Politically Connected" 

Masiello's Strategy to Win A Contract 

"Payment of Money in Consideration for Obtaining Contracts 
The Selection Process - Official and Unofficial 

A Call From Toots Manzi 

"He Would Completely Wash His Hands of M e " 

What Manzi Required 

Masiello's Trip to California 

Masiello's Guidelines: No Money Up Front 

Masiello's Negotiations with f*anzi 

The Mechanics of Making the Contribution 

Masiello Comes to Terms with Manzi 
The Acquisition of the Contract 
Smith Meets Manzi and Makes the Deal 
Manzi Recommends MBM 
The DSB Interview 
The Commissioner's Selection 
The Proj ect Begi ns 

Manzi's Weekly Calls to Masiello 



1 

2 

4 

4 

5 

6 

7 

9 

10 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

23 

24 



XI 1 



DMJM's First Payment to Manzi 

Manzi Monitors for Payments to DMJM 

DMJM's $5,000 Check 

How the Check was Cashed 

The Delivery to Manzi: "Is That All?" 
Preparation of Plans and Specifications 

The Masiello - DMJM Contract Dispute 

DMJM's Differences with Manzi 

The Masiello - DMJM Meetinq in Washiqton in June, 1970 

The Sonesta Hotel Meetinq in July, 1970 

The BBC Meetinq on Costs 
The Second Delivery to Manzi 

"What in Hell am I Go inn to Do with Five-Dollar Bills?" 

Manzi 's Pressure Continues 

"Deadbeats" 

The Proiect Goes Forward 

"I am Under a Lot of Pressure from My People" 
DMJM's Third Delivery to Manzi 

The California Cashier's Checks 

Masiello's Continuing Contract Dispute with DMJM 

Kussman Reviews the Contract for Masiello 

Masiello's Further Negotiations with DMJM 
DMJM's Fourth Delivery to Manzi 

More Cashier's Checks 

Further Masiello - DMJM Negotiations 
DMJM's Fifth Payment to Manzi 
DMJM's Continued Services for Phase II 

Masiello Uses Manzi 's Leverage over DMJM 

Masiello Uses Influence in the BBC as Leverane over DMJM 
DMJM's Sixth Delivery to Manzi 
Masiello's Trip to California 
The End of the Masiello - DMJM Relationship 
Co ncl us io n 



26 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

39 

39 

40 

41 

43 

43 

44 

1 5 

46 

I 8 

49 

51 

52 

53 

53 

54 

56 

58 

60 

63 



XI 1 1 



Masiel To: If A Hand Is Open 

The Masiello Strateny: Filling the Open Hand 

Masiello's Background 

The Public Relations Approach 

W i n i n o and Dining 
Masiello's Record of Obtaining State and County Projects 

Brief History of the Firm 

Public Architecture the Main Work of the Firm 
The Investigation 
Cash feneration 



1 
2 
4 
5 
6 
6 
6 
7 
14 
17 



Frank Masiello in the 1 960 ' s : The Education of A Political Architect 2 3 

Introduction 23 

The Best Way to Continue Contracts 24 

The Connelly School: A Very Slim Year 27 

The Gentile School Project 28 

MCI Norfolk: A Job Not Worth Goinq After 31 

Manzi Puts Pressure on Masiello 32 

"This Is Coming Out of My Hide" 33 

More Money Authorized for the Gentile Project 15 

Over Two Million Dollars in Design Fees f or the Masiello Firm 35 



How Masiello Used Political Contributions As "Door Openers" 
To Suffolk County Contracts 

Introduction 

Masiello's Political Fundraising Activities: The Door Opener 

Vey's Fundraisinn Activities: The Political Boiler Room 

The Dudley - Harrison Fire Station 

An Unusual Desinner Selection Procedure 

An Erroneous Fee Calculation by Vey in Masiello's Favor 

A Phony Change Order to Fund a Political Contribution 

The Charles Street Jail/Deer Island Project 
Another Unusual Selection Procedure 
The Connection Between Contributions and Contracts 
Keeping the City "Out of the Prison Business" 
Overpayment of Desion Fees Through Padded Tine Records 
"I Became Part of His Scheme" 



37 
37 
37 
40 
44 
44 
46 
47 
50 
50 
53 
54 
55 
58 



XI V 



Designing A Summer Home for Sheriff Eisenstadt 

A "Larqe, Assumino Home" 

Taxpayers Foot the Bill 
Conclusion 



59 
59 
61 
61 



The Masiello Firm's Series of Contracts with Worcester County 



Shrewsbury Housing Authority 
Introduction 

One Version of the SHA Selection Process 
The Possibility of a New Selection Procedure 
William Masiello's Pursuit of SHA Work 
An Increase in Fees for the Masiello Firm 
Payments to Masiello & Associates and Payments on a Promise 



88 
88 
88 
91 
92 
96 
98 



Taunton Housing Authority 
Introduct i on 

Background to the Contract Award 
Payments 
Fundraising 
Kitchen Cabinets 



105 
105 
106 
103 
111 
112 



Fall River Housing Authority 



115 



Masiello's Strategy to Win the Springfield Mental Health Center Contract 1 2 2 

Introduction 122 

The Unexpected Loss of the Bristol County Jail 122 

The Beginning of A New Strategy 1 24 

TruceDiscussions 124 

Making Peace With Zuchero 125 

Becoming One of Three 126 

"Serenading" Kerr for His DSB Vote 126 

Lining Up the Vote of the BBC 127 

Masiello Re-Contacts Zuchero 128 



XV 



The Final Step in the Plan 

Input Into Designer Selection: Whose Checkmarks 

The Winning of the Sprinqfield Project 

Masiello Makes Good on His Commitment 

The Project Dwindles to a Halt 

Concl us ion 



130 
132 
134 
1 35 
1 38 
138 



XVI 



VOLUME IV 

TABLE OF CONTENTS 
THE AWARD OF DESIGN CONTRACTS : AN OVERVIEW 

I. Introduction 1 
II. Peabody Era 

A. Introduction 6 

B. Background: Fundraising and Design Contract Awards 8 

C. The Boiler Room: Squeezing Money Out of a Stone 9 

D. Simple Favoritism: How Design Contracts were Awarded 12 

E. Design Legacy of Simple Favoritism 18 

F. Conclusion 19 
III. Volpe Era 

A. Before the Establishment of the Designer Selection Board 20 

1. Introduction 20 

2. Frank Masiello 20 

3. Special Senate Committee Investigation 22 

B. After the Establishment of the Designer Selection Board 27 

1. A&F Commissioner John McCarthy 27 

2. A&F Commissioner Anthony DeFalco 29 
IV. Sargent Era 

A. Introduction 43 

B. Significant Individuals 45 

1. Donald Dwight/Albert Zabriskie 46 

2 . Harold Greene 50 

3. Victor Zuchero 56 

4. Governor Sargent 56 



XVI 1 



C. Architects 60 

1. Gourley Correspondence 60 

2. Harold Greene Memorandum 63 

a. Borek. Associates, Inc. 70 

b. Samuel Ussia & Associates 72 

c. E.J. Flynn Associates, Inc. 73 

d. Abraham Woolf & Associates 74 

e. Tallman, Drake & Guay 75 

f. John Carr Associates 76 

g. R. Scott Quinlan 78 
h. Healy & Healy Architectural Associates 80 

3. Desmond & Lord; Bristol County Jail Contract Award 82 

4. Masiello & Associates; Springfield Mental Health Center 

Contract Award 87 

5. Other Architects 89 

D. Commissioners of A&F 

1. Charles Shepard 97 

2. Robert Yasi 99 

3. William Cowin 103 

4. David Marchand 106 
V. Conclusion 110 



XVI 1 1 



DESMOND AND LORD, INC. 

Introduction 1 

History of the Firm 1 

Thissen's Role in the Firm 2 

Emphasis on Public Contracts 2 

Desmond and Lord's Public Design Contracts 4 

Bureau of Building Construction Contracts 5 

Fees Paid 5 

Designer Selection Board Approval 5 

Continued Services Contracts 6 

Law Suits 6 

Public Instrumentalities 6 

The Selection Process 

Contracts Within the Jurisdiction of the Bureau of 

Building Construction 8 

Prior to the Establishment of the Designer Selection Board 8 

Selections by the Designer Selection Board 11 

Massport Contracts 18 

International Terminal 21 

South Terminal 25 

South Station Complex 33 

Performance of Design Contracts 3 7 

Fee Analysis 

Standard Procedures 44 

Desmond and Lord Analysis 46 

Establishing Complexity 46 

Fee Calculations for Large Projects 47 

Increased Construction Cost 48 



XI X 



Political Influence 51 

Method of Political Contributions 52 

Financial Analysis 53 

Cash Generation 54 

Fiscal Year 1970 56 

Fiscal Year 1971 57 

Fiscal Year 1972 58 

Fiscal Year 1974 59 

The April Bonus Checks 60 

Checks to Cash 60 

Political Contributions in the Name of a Third Person 61 

Jane Walsh 61 

Mary Maloof 62 

Sepp Firnkas 65 

Alphonse Mancuso 65 

Conclusion 67 



Table 1: BBC Projects 
Table 2: Massport Projects 



XX 



VOLUME V 



Table of Contents 



SUPPLIERS 



Introduction 

The Methods 

Specifications 
Nonfiled Sub-bids 
Filed Sub-bids 
Allowances 
Form of Kickbacks 

Case Studies from Investigations and Testimony 

Millwork: Ralph Iaccarino and Sons Lumber Co., Inc. 

The Trade 
The Firm 
Scope of Study 
Investigative Results 

How the Contracts Were Awarded 
What Was Given in Return 
How the Firm Was Able to Pay 
Examples of the "Rip-off" 

Hardware: Shawmut Hardware Corporation, Inc. 

The Trade 
The Firm 
Scope of Study 
Investigative Results 

How the Contracts Were Awarded 
What Was Given in Return 

Landscaping: Arello, Incorporated 

The Trade 
The Firm 
Scope of Study 
Investigative Results 

How the Contracts Were Awarded 
What Was Given in Return 

Office Furniture: Krizik and Corrigan, Inc., 

Commonwealth Stationers, Inc. 

The Trade 
The Firms 
Scope of Study 
Investigative Results 

How the Contracts Were Awarded 
What Was Given in Return 



1 
4 
5 
6 
8 

10 

10 

10 
10 

n 
n 

n 

14 
15 
17 

24 

24 
24 
24 
25 

25 
29 

32 

32 
32 
32 
32 

32 

34 



38 

38 
38 
38 
39 

39 

44 



XXI 



Security Windows: The William Bayley Company 47 

The Trade 47 

The Firm 47 

Scope of Study 47 

Investigative Results 48 

How the Contracts Were Awarded 48 

What Was Given in Reutrn 49 

Brick: Provost Company, Inc. 51 

The Firm and Its Trade 51 

Investigative Results 51 

How the Contracts Were Awarded 52 

What Was Given in Return 52 

Athletic Equipment: SunLea Sports Company 54 

The Firm and Its Trade 54 

Investigative Results 54 

Conclusion 56 

Driscoll Weber 58 

The Driscoll Weber Investigation 59 

Financial Profile of Driscoll Weber 61 

Predominant Supplier of Kitchen Cabinets 61 

Process for Awarding Kitchen Cabinet Contracts 62 

Driscoll Weber's Record as Kitchen Cabinet Supplier 64 

Architects' Use of Driscoll Weber's Specifications 65 

Robert Charles Associates 66 

Masiello and Associates, Inc. 67 

John Carr Associates 68 

Reinhardt Associates 68 

Influencing the System 69 

Cash Generation 69 

Payments to Design Firms 71 

William Masiello 71 

Hugh Quigley of Robert Charles Associates 74 

David Murphy 74 

Reinhardt Associates 75 

Contributions to Employees of the Department of 

Community Affairs 75 

Michael Harrington 75 

Richard Skerry 78 

Political Contributions 82 

Contributions Through Manzi 82 

Sylvester Sylvia 83 

Conclusion 84 

Testing Consultants 86 

Introduction 86 

Background 86 

A Case Study: Success at a Cost 88 

Conclusion 93 



XXI 1 



INFLUENCE EXERCISED ON ADMINISTRATIVE AND LEGISLATIVE ACTION 



Neutralizing Supervision 95 

Overview of Strategies to Influence Legislators 

and Neutralize Supervision 95 

Specific Means of Buying Access 95 

Political Fundraising 95 

Related Political Activity 96 

Professional Fees 97 

Entertainment 98 

Travel and Conventions 100 

Gifts 100 

Sporting Events 101 

Free Services and Use of the Firm's Credit 101 

The Access That Was Bought 102 

Masiello & Associates, Senator James A. Kelly and the 

Legislative Process 104 

What the Masiellos Did For Kelly 104 

What Kelly Did in Return 124 

Introduction 124 

MCI Concord 125 

Kelly's Role in Capital Outlay Appropriations 126 

The $4.5 Million Appropriation 127 

Kelly Secures Masiello's "Monopoly" over MCI-Concord 127 

Kelly's Appropriation Methods 128 

Capital Outlay Budget Formation 128 

The Chairman's Advantages 129 

Access to Other Legislation Action 129 

Kelly Introduces Masiello to Important Boston Contacts 130 

Masiello as a Go-Between With Kelly 131 

Kelly's Blank Receipts Document Cash Generating Checks 132 

Kelly Assures Masiello & Associates Contracts 132 

Kelly Offers Masiello Money to Leave the State 133 

The J. A. Sullivan Corporation and the BBC 135 

Contractor Selection at Salem State College 135 

Payments to Frederick J. Kussman 136 

October 10, 1973 Check 136 

1974-1976 Consulting Services Checks 140 

Performance as a Contractor 143 

Salem State College 143 

SMU Fine Arts Building 147 

Cash Generation 152 

Political Contributions 152 

Checks Deposited or Cashed by Barbara Manning 154 

Manning Checks Charged to Bidding Expenses 156 

Mel Daniel's Check Voucher 159 

Conclusions 159 



XXI 1 1 



LAUNDERING IMPROPER CAMPAIGN CONTRIBUTIONS 



Introduction 163 

The DMJM Story 163 

What the Commission Found in Manzi's Bank Account 164 

How the Commission Found What It Was Looking For 165 

Procedures for the Commission's Audit 166 

Guaranty Bank and Trust Company Accounts 4-336-7011 and 4-338-1359 166 

Bank Procedures Followed in Retrieving Information 167 

Other Sources of Information 168 

Sargent Reception Committee Treasurer Paul A. Hogan's Role 

under Manzi 168 

Sargent Committee Records 169 

Boston Globe Article 169 

Findings of the Commission's Audit 170 

Tracing the California Cashier's Checks 170 

California Cashier's Checks Deposited on September 14, 1971 171 

Sargent Reception Committee Deposit on September 14, 1971 171 

Contributors 171 

Probable Source of the Cashier's Checks 173 

California Cashier's Checks Deposited on February 7, 1972 173 

Sargent Reception Committee Deposit on February 7, 1972 173 

Contributors 174 

California Cashier's Checks Deposited on March 30, 1972 174 

Sargent Reception Committee Deposit on March 30, 1972 175 

Contributors 175 

May 2, 1972 Deposit 178 

Contributors 178 

Other Unidentified Contributions 178 

Unidentified Cashier's Checks 178 

Undeposited Cash Contributions 180 

Conclusion 181 



XXI V 



CASH GENERATION AND CASE STUDIES 



Introduction 

Cash Generation Case Studies 

An Architect with a Local Monopoly 

An Architect's Relationship with a County 

Another Architectural Firm 

A Former Mayor Hired by an Architect as a "Consultant" 

An Engineering Firm 

A Major Engineering Consultant to Architects Under 
I n ves ti gati on 

A General Contractor's Petty Cash Fund 

Another Construction Company 

A Family of Companies 

Other Cash Generation Techniques 

Concl usions 



133 
185 

135 
186 
188 
189 

190 

192 
194 
196 
198 
199 
203 



XXV 



VOLUME VI 



CONSTRUCTION DEFECTS 
STATE AND COUNTY BUILDINGS 



Table of Contents 

Introduction 2 

Summary of State and County Building Construction: 1963 - 1979 7 

Physical Condition of State and County Buildings Constructed from 1968-79 10 

Questionnaire Survey Procedures 10 

AnalysisofQuestionnaireResponses 11 

Technical Invest igations and Inspections 15 

AnalysisofTechnical Invest i gat ive Results 16 

Building Defects by Category 19 

Systemic Defects Observed in Technical Investigations 21 

Building Defects and Filed Subcontractors 24 

Review of Contract Time Data 26 

Evidence of Fraud from Technical Investigations 26 

Estimated Construction Costs to Repair Defective Work 23 

Case Studies 30 

BBC Administered Contracts 

Cape Cod Community College 32 

Salem State College: Library Building 42 

Boston State College: Tower Building 47 
Southeastern Massachusetts University: Physical Education Building 54 

Bridgewater State College: Athletic Fields 58 

University of Massachusetts/Amhers t : Library 66 

University of Massachusetts/Amherst : Tillson Farm Power Plant 80 

University of Massachusetts/Boston: Columbia Point Campus 94 
University of Massachusetts/Worcester - 105 

Pondville Hospital 120 

Haverhill Parking Deck 124 

Worcester County Jail 130 

Hingham District Court House 138 
Independent Building Authority Administered Contracts 

University of Massachusetts Building Authority 144 
Department of Community Affairs Administered Contracts 

Melrose Housing Authority: McCarthy Apartments 152 

Duxbury Housing Authority: Duxborrough Village 172 

Randolph Housing Authority: Housing for the Elderly 175 



XXVI 



VOLUME VII 



Table of Contents 



SYSTEMS ISSUES AND FINDINGS: 



THE SYSTEM OF PUBLIC CONSTRUCTION IN MASSACHUSETTS: 
AN ANALYSIS OF AREAS OF CORRUPTION AND MALADMINISTRATION, 
WITH RECOMMENDATIONS FOR IMPROVEMENT 
(beginning) 



INTRODUCTION 



Description of the Sections Which Follow 



THE SCOPE AND NATURE OF THE COMMONWEALTH'S 
CAPITAL INVESTMENT PROGRAM 



The Commonwealth's Capital Investment Program 
In the Past 

Distribution Among State Agencies 

Distribution Among Counties 

Building Authorities 

Division of School Facilities 

The Department of Community Affairs 

Other Agencies 

Future Building Programs 



8 

9 
10 
10 
11 
11 
11 

13 



FORMAL ORGANIZATION AND PROCESSES 

Organization of the Commonwealth 

Organization of Project Planning and Management 
Agency Structure 
Normal Capital Outlay Process 
Department of Community Affairs 
MHFA 
Division of School Facilities and Related 

Servi ces 
Higher Education Building Authorities 



19 

19 

27 
27 
28 

30 
31 

32 
34 



CAPITAL PLANNING AND BUDGET 
I ntroducti on 



36 
36 



XXVI 1 



The Formal System of Capital Outla y 
Agency Requests 

Administration and Finance ( A & F ) 
Bureau of Building Construction Review 
Governor's Recommendation 
Submission to the Legislature 
House Ways and Means Report 
Senate Consideration 
Conference Report 
Governor ' s Action 
County Budgetary Process 

Agency Requests 

Submission to the State 

Project Approval 

Results of Capital Planning 

General Factors Influencing Capital Planning 

Specific Systemic Problems in the Capital Planning Process 



Lack of an E 

C a p i t a 1 
Lack of Reso 

PI anni n 
Lack of Clea 

PI ans 
Lack of Reso 

Garner 
I nabi 1 i ty to 

E x i s t i n 
The Abi 1 i ty 

Capital 

State-W 
Participatio 

I nf 1 uen 
A Process fo 

D i s o r g a 
A Hasty and 

Capital 
The I nsert i o 

on the 



xecutive Agency Capable of Performing 

Outlay Rev i ew 
urces and ExDertise for Long Range 

9 

r Cut Policy Decisions and Long Range 

urces and Ability to Articulate Needs, 
Resources and Implement Plans 

Assess State Needs in Light of 
g Facilities 
of Agencies to Secure Appropriations for 

Outlay Projects Without Relationship to 
i de Go a 1 s 

n by Legislators Exercising Inordinate 
ce During the Agency Deliberation Process 
r Making Decisions Which Is Often 
nized, Haphazard, and Irrational 
Relatively Ill-informed Review of the 

Budget by the Legislature 
n of Unevaluated Projects into the Budget 
Floor of the Legislature 



Gubernatorial and Legislative Review of the Main Capital 
Outlay Budget 

Solutions to Specific Problems: Legislation Proposed 
By the Commission and Enacted Into Law 



Operations 



Division of Capital Planning and 

Relationships to the Budget Process and the Operating 

Budget 
Internal Structure of the Division 
Responsibilities of the Deputy Commissioner 
The Division's Jurisdiction Over Planning 
Distinction Between Jurisdiction as to Planning and 

Jurisdiction as to Operations 
The Content of Long Range Plans 
Specific and Lump-Sum Requests 
Budget Requests 
Resources for Planning 
Reviews of Plans and Requests 
Mandated Studies and Programs 
Phasing of Procurement 
Other Provisions of the Legislation 
Reports on Pro j ec ts 
Advisory Council 



36 
36 
37 
38 
39 
39 
40 
41 
42 
42 
42 
42 
42 
43 

44 

55 

60 

60 

61 

63 

64 

66 

67 
63 
69 
72 
75 

79 



32 
82 

82 
33 
34 
85 

36 
86 
88 

88 
33 
90 
93 
95 
97 
99 
100 



XXVI 1 1 



REAL PROPERTY MANAGEMENT 



102 



The Formal System of Real Property Management 
Information Management 
Al location 
Acquisition 
Disposition 

Problems of Real Property Management 
I n troduct i on 

The Lack of a Real Property Management "System" 
Fragmentation of Responsibility 
Lack of Expertise and Resources 
Inappropriate Political Considerations 
Information on Property 
Al location 
Acquisition 
Disposition 

Solution to Problems of Real Property Management 



The Division of Capital 
Al location 
Acquisition 
Disposition 



Planning and Operations 



102 
102 
103 
104 

105 

105 
105 
106 
107 
109 
109 
110 
111 
115 
118 

119 
119 
121 
123 
125 



PROGRAMMING 



INDIVIDUAL PROJECT PLANNING 



Results of Inadequate Project Definition 
Del ays 

Cost I ncreases 
Design Fail ures 
Abandoned Projects 



How Programming Should Work 

The Purpose of Programming 
Responsibility and Resources 
Standards for Programs 



for Programming 



Solutions 



Programming in Capital Planning and Budgeting 

An Office of Programming 

Programming Consultants 

Funds for Programming 

Cost E s t i ma t i n g 

The Role of the Project Manager 



128 

128 
129 
130 
131 
132 

133 
133 
136 
137 

138 
138 
140 
140 
141 
141 
141 



DESIGNER SELECTION 187 

The Formal System of Designer Selection 188 
Composition of the Designer Selection Board; Receipt 

of Applications and Recommendations by the DSB 188 
Selection of the Designer by the Commissioner of 

Administration , 139 

Non-DSB Designer Selection: Waivers 139 
Non-DSB Designer Selection: Continued and Extended 

Services 190 



Patterns of Corruption in Design Contract Awards 
The Sargent Administration 
The Volpe Administration 
The Peabody Administration 

Local Housing Authorities and Department of Community 
Affai rs 

What the Evidence Shows: Awards Involving the DSB 
DSB Operations 
By-Pass of the DSB 
A&F Designer Contract Awards 
Housing Authority Projects 



190 
191 
195 

196 

197 

193 
198 
202 
204 
206 



XXI X 



The Quality /Corruption Connection 

An Improved Designer Selection Process 
Widening Distribution 
Fee Bidding 

Fees: the Alternative Views 



Fee Bidding 

Fee Bidding 

Fee Bidding 

Fee Bidding 



Parti cu 1 ars 
the Concept of 
I ntegr i ty 
Conclusion 



"Qua 1 i f i ed ' 



Specific Recommendations 
Model s 

Specific Recommendations 
Selection 
DSB Procedures 
Fees 

Condition of Awards 
Jurisdiction 
DSB Staff 
DSB Membership 

Recommendations Regarding Housing Authorities 
Impl ementa t i on 



211 

212 
213 
214 
215 
218 
224 
227 
223 

229 
229 
231 
237 
237 
240 
241 
242 
244 
244 
246 
249 



DESIGN 



253 



The Formal System of Project Design 

Preparation of the Design Contracts 

Approval of Consultants 

Execution of the Contract 

Initial Project Conference 

Preparation of Preliminary Plans and Specifications 

Preparation of Working Plans and Specifications 

Payments to Designers 

Problems in the Design System 
Poor Design Quality 
Del ay 

Cost Control 
Fee Arrangements 
Specifications and Supplier Scams 

Analysis of Problems 
Programmi ng 
Designer Selection 
Consultants 
Design Rev i ew 
Design Qua 1 i ty 
Delay of Design 
Cost Control 
Lack of Accountability 
Lack of Formal Evaluation 

Solutions 

Planning, Programming, and Designer Selection 
Approval of Consultants 
Project Management 

Cost 

Schedule Control 

Substantive Review 

Award of Construction Contract 
Al 1 owances 



253 
253 
254 
254 
255 
255 
256 
256 

258 

258 
261 
263 
263 
270 

273 
273 
274 
274 
275 
276 
276 
278 
279 
280 

280 
230 
281 
281 
281 
281 
282 
282 
232 



XXX 



VOLUME VIII 



Table of Contents 



THE SYSTEM 



SYSTEMS ISSUES AND FINDINGS: 
OF PUBLIC CONSTRUCTION IN MASSACHUSETTS 
(concl us i on ) 



CONSTRUCTION BIDDING 

THE FORMAL SYSTEM OF CONSTRUCTION BIDDING 

Preparations for Bidding 

Prevai 1 i ng Wages 

Advertising 

Competitive Bidding on Building Contracts 

Plans and Specifications 

Filing of Sub-bids 

General Bids 

Selection of the General Contractor 

SUBCONTRACTOR SELECTION 
The Evidence 



Introduction 

The Quality of Sub-Contractors' Work 

The Evaluation of Sub-Contractors' Work and Its 

Effect on Contract Awards 
Sub-bidding Improprieties: Shopping, Peddling 

and Rigging 
Bid Shopping 

A State Prison 

A Communi ty Coll ege 

A State College 

A School for the Retarded 
Bid Rigging 

MCI Concord Project P61-1 #4 

MCI Concord Project P61-1 #9A 

MCI Concord Project P61-1 #9C 

Worcester County Jail 
Admi ni stration 
Restrictive Effects of Filed Sub-bidding on Design 

Architectural Technology 
Accessibility to "New" Sub-Contractors 
Cost of Construction 



234 

284 

284 
234 
285 
235 
236 
286 
287 
238 

289 

239 
239 
290 

292 

297 
297 
302 
304 
304 
306 
306 
303 
309 
309 
309 
312 

316 
319 
323 



What the Evidence Shows 
Qua 1 i ty 
I ntegri ty 
Admi n i strati on 
Access i bi 1 i ty 
Cost 



329 
329 
329 
330 
330 
331 



A New Sub-Contractor Selection System 

Qual i ty of Work 

Cost 

Administration 

I ntegri ty 

Access i bi 1 i ty 
Alternatives 
Recommendati ons 



331 
332 
332 
332 
332 
333 
333 
341 



XXXI 



:ONTRACTOR : - A L '. z '. C AT I 3 N S 



Introduction 



L e g i s 1 a t i v e S a 1 j :^ o n s ; r " I-^est'fs ~~ o r I ~ o ": e ~ e r t at - : ^ 
? r e q u a 1 ification 
Debarment 

[MPROPER USE OF ALTERNATES AND .'.IT PRICES 

A1 terna tes 

Discussion of the Problem 
Legislative Solution 



Unit Prices 



Discussion of the Problem 
Proposed Solutions 



343 

343 

347 
347 
352 

355 

355 
355 
356 

357 

: = : 

358 



ACCESS TO PUBLIC CONTRACTS 



350 



^ontractina Oooortum 



es for Minority and Women-Ownea 



Businesses 



360 

Introduction 260 

Federal Government 363 

Problems with the Bureau of Building Construction 365 

Legislative Solutions and Suggestions for Implementation 366 

Certification of Minority and Women-Owned Businesses 363 

Enforcement 368 

Ability to Waive the Set-Aside Requirement in 

Cases of Hardship 369 

Central Register Listing Contracting Opportunities 369 

The Legislation 369 

BackgroundoftheLegislation 370 



PROJECT MANAGEMENT 
In troduct i on 



The Formal System of Project Management 

Execution of :ne Contract 

Construction Phase 

The Clerk-of-the- Works 

Change Orders 

icate of Use and Occupancy 

of Substantial Completion 
of Final Inspection, Release 
the General Contractor 
the Sub-Contractors 



Certificate 
Certificate 
Payments to 
Payments to 



and Acceotance 



? roo1ems in D roject Management 



Construction Supervision 

The Role of the Designer 

The Clerk-of-the-Works 

The Role of the BBC Project 

Construction Supervision on 

Case Studies of Inadeauate Project Management 

Cape Cod Community College 

McCarthy Apartments 



on 3BC Projects 



Engineers and 
OCA Projects 



Insoec tors 



372 

372 

372 
372 
373 
374 
375 
375 
375 
375 

:--. 

376 

377 

377 
378 
379 
330 
331 
331 
332 
383 



Dost 1 : n t r o 1 s 

Statistics on Cost Overruns 
Concealed Overruns 
r =.iljre to Monitor Change Orders 
Pricing of Change Orders 
: Dorovals of Change Orders 
3t!ier Sources of Financial Waste 
Costs Due to D e 1 a > 
Fraud as a Source of Cost Overruns 



383 

333 
334 
335 

337 

337 

1 

329 



XXX 1 1 



Del ay 

Delay on 3BC Projects 

Failure to Penalize Contractors for Delay 
Delay Caused by Change Order Process 
Delay Caused by Construction Disputes 

Legislative Solutions and Suggestions for Implementation 

Construction Supervision 
Project Managers 
Resident Engineers 

Implications of the New Legislation 
Elimination of Waiver of Jurisdiction 

Cost Control 

Cost Est i ma ting 

Change Orders 

Authority to Order Changes 
Constructive Changes in the Work 
Pricing of Change Orders 
Unchanged Work -- Consequential Work 



Time Control 

Recommended Contractual 
DisDute Resolution 



Prov i s i ons 



339 
389 
390 
391 
392 

393 

393 
393 
394 
395 
396 

396 
396 
397 
397 
399 
399 
401 

402 
402 

402 



BUILDING MAINTENANCE AND REPAIR 



406 



I ntroduc t i on 



406 



Problems of Maintenance and Repair 
Maintenance Operations 
Repair Operations 
Funding 

Maintenance and Repair Personnel 
Results of Poor Maintenance and Repair 
Maintenance and Repair of the Government 
Energy Conservation 

Solutions to Maintenance and ReDair Problems 



Center 



406 
406 
407 
408 
411 
412 
414 
416 

417 



RECORD KEEPING 



Introduction 



422 
422 



Problems in Record Keeping 
The Comptroller 
The Bureau of Building Construction 

Record Keeping Criteria 

Maintenance of Files 

Contract Documents 

Record Storage 
Using Agencies 

Other Administrating Agencies 
Private Vendors 



424 
424 
424 
424 
425 
426 
427 
427 
423 
429 



The Framework of Responsibility for Record Keeping 
Those Keeping and Using Records 
Supervision of Record Keeping and Standards 
The Nature and Cause of Record Keeping Problems 



430 
430 
432 
432 



Sol u t i o n s 



The Records of Public Agencies 
Recommendations Concerning Private Vendors 



433 
433 
436 



RECOMMENDED BUDGE" 



439 



The Division of Capital Planning and Operations: 
Cost Analysis 



439 



XXXI 1 1 



CAMPAIGN FINANCE 



Introduction 



I. FINDINGS ON THE EFFECT OF PRIVATE MONEY ON GOVERNMENT 

DECISION-MAKING 3 

A . Summary of Findings from Specific Investigations 3 

Policies Concerning Disposition of Contracts 5 

Quid Pro Quo Agreements . 6 

Fundraising Activities as Means of Exercising Influence 7 

Influence in Areas other than Contract Awards 7 

B . Summary of Conclusions from the Commission's Review 

of Campaign Finance Reports 8 

C . Analysis of Data from Commission's Review of Campaign 
Fundraising Reports 9 

Introduction 9 

Campaign Fundraising: Non-Election Year 10 

The Importance of Raising Large Single Contributions 14 

Impact of Special Interest Groups: Aggregate Contributions 15 

Large Single Contributions 15 

Influential Legislators 15 
Special Interest Groups Not Reporting as a Political 

Committee 20 



II. FINDINGS ON THE FAILURE OF THE EXISTING SYSTEM TO ENFORCE 
CAMPAIGN FINANCE LAWS 

A . Violations of Provisions for Reporting Contributions 

Concealed Corporate Contributions 
Inadequacy of Existing Disclosure Reports 

B . Role of the Office of Campaign and Political Finance 

Deficiencies of the Office as a Record Keeping Agency 
Failure of the Office to Perform Auditing and 

Investigative Functions 
Failure of the Office to Perform its Advisory Role 
Lack of Accountability of Office 

III. SUMMARY OF RECOMMENDATIONS FOR RESTRICTING LARGE CAMPAIGN 
CONTRIBUTIONS AND PARTIAL PUBLIC FINANCING OF POLITICAL 
CAMPAIGNS 

Analysis of Effectiveness of Improved System of Public 
Financing of Campaigns 

Principal Findings 

Analysis Supporting Principal Findings 

Fiscally Responsible Proposal 

Adequate Funding 
Sufficient Monies from the Tax Check-Off 
Triggering Mechanism: Making the Public Financing 

Proposal Fiscally Sound 
Special Provisions for 1932, 1984, and 1986 
Other Elements of an Effective Public Financing System 



22 

22 

22 
23 

23 

24 

25 
26 
27 

27 

29 

29 
29 
30 
30 
32 

32 
33 
33 



XXXI V 



IV. SUMMARY OF RECOMMENDATIONS FOR DEALING WITH REPORTING 
DISCLOSURE AND ENFORCEMENT 

A . Proposals Concerning Campaign and Political Finance 

Comrni s s i o n 



Campaign and Political Finance Commission 

Investigative Responsibilities 

Pena 1 ti es 

Annual Reporting 

Proposals for Improved Record Keeping and Reporting 

Retention of Records 

Reports by Legislative Candidates 

Reports by Persons Doing Business with Public Agencies 

Definition of Political Committees 

Permissible Campaign Expenditures 



34 



34 

35 
36 
36 
36 

36 

37 
37 
37 
38 
38 



SUPPLEMENT A : DETAILED SUMMARY OF CAMPAIGN CONTRIBUTIONS TO 

AND EXPENDITURES BY CANDIDATES FOR STATEWIDE OFFICES IN 1978 
AND CALCULATION OF EFFECTS OF PROPOSED PUBLIC FINANCE SYSTEM 

ON CONTRIBUTIONS TO CANDIDATES FOR STATEWIDE OFFICES 39 

Election for Governor 41 

ElectionforLieutenantGovernor 44 

Election for Attorney General 47 

Election for Secretary of the Commonwealth 50 

Election for Treasurer 54 

Election for Auditor 58 

SUPPLEMENT B: CALCULATION OF EFFECTS OF PROPOSED PUBLIC FINANCE 

SYSTEM ON CONTRIBUTIONS TO CANDIDATES FOR LEGISLATIVE OFFICES 61 

1973StateRepresentativeElection 62 

1973 State Senate Election 63 

1973 State Representative Election: Democrats 64 

Republicans 66 

Independents 68 
Qualifying Candidates for 1973 Election for State 

Representative 70 

1978 State Senate Election: Democrats 71 

Republicans 73 

Independents 75 

Qualifying Candidates for 1973 Election for State Senate 77 

SUPPLEMENT C: DETAILED DESCRIPTION OF TRIGGERING MECHANISM 73 



SUPPLEMENT D : 1978 GENERAL ELECTION FOR THE HOUSE OF 
REPRESENTATIVES: OUTCOME BY MONEY SPENT 



33 



XXXV 



DETECTING AND PREVENTING FRAUD 



THE OFFICE OF INSPECTOR GENERAL 
Introduction 

Problems in Detection and Prevention 
Limitations on the Role of the State Auditor 
Limitations in Prosecutors' Roles 
Sol u ti ons 

The Federal Model 

Key Characteristics 
Recommendations and Legislation 

Jurisdiction 

I ndependence 

Subpoena Powers 

Ref erra 1 s 



35 
36 
36 
36 
37 
38 
38 
39 
91 
92 
92 
93 
95 



ENFORCEMENT STATUTES 

The Need for New Laws 
The New Statutes 

False Statements 
Economi c Extortion 



95 
95 
96 
96 
96 



PILOTING THE LEGISLATION 



ORGANIZATION 



DEVELOPING AND DRAFTING LEGISLATIVE PROPOSALS 
PRESENTING A CASE TO THE GENERAL COURT 



ASSUMPTIONS AND GOALS 

Legislative Action 

Timing a Legislative Campaign 

Active or Passive Agent 

DEVELOPMENT OF PROPOSALS AS A POLITICAL PROCESS 

The Basics: Getting Information and Help 
Planning Backward and Forming Coalition 
Timing a Compromi se 
Drafting Completeness and Accuracy 



100 

100 

100 
101 
102 

103 

103 

104 
106 
107 



XXXVI 



THE LEGISLATIVE PROCESS 

Leadership Structure 

Ritual 

Rumors 

Sponsorship 

The Written and Spoken Work in the Legislature 

Identifying the Votes 

Dividing the Work 

Cards and Letters 

Staff Back-Up 

Committee Mark-Up 

FLOOR ACTION 

Roll Call Votes 

Timetable 

Honey or Vinegar 

Conference Committee 

Third Reading 

The Governor's Signature 

Prospects for 1981 



108 

103 
109 
109 
109 
110 
111 
112 
112 
112 
113 

114 

114 
115 
116 
117 
117 
113 
113 



NEWS MEDIA 



One Voice 

Press Secretary 

Timing 

Monitoring News Coverage 

Forms of News Issuance 

The I ntervi ew 

The Press Conference 

The Background Story 

Leaks 

Public Hearings 

Information Provided 

The Final Report 

Performance of the Media 



119 

119 
120 
120 
121 
121 
122 
123 
123 
123 
124 
126 
126 
127 



THE SPECIAL COMMISSION IN COURT 



WARD v 



PEABODY 



133 



PUBLIC HEARINGS: KELLY, THISSEN, DOE and GREENE 

Ward v. Kelly; Ward v. Thissen 

Doe v. Ward 

In the Matter of Harold Greene 

Daniel J. Burke 
OTHER CASES 

David B. Coletti 

Impounded Cases 

Ward v . M a n z i 
CONCLUSION 



138 
138 
141 
142 
143 
145 
145 
146 
147 
148 



XXXVI 1 



VOLUME IX 



THE COMMISSION'S NARRATIVE 



Introduction 

Events Leading to Proposals for a Commission 

December Appeal 

Calls for a Commission 

Commission Bill Filed 

Hearing Date Set 

Judiciary Committee Hearing 

The Curtin Memo 

Commission Bill to House Floor and Passed 

Senate Passes Bill: Governor Signs 
Constitution of the Commission 

Commission Constituted 

First Interim Report 
Commission Faces Delays 
Assembling Data on State Contracts 

Investigations Initiated 

Commission Evaluates Investigative Alternatives 
Consideration of the Budget 

Revisions to the Commission's Enabling Resolve 
Approval of Provisions 

The Struggle for the Budget and the Amendments 
The Interim Report 

The Commission Submits an Application for a Federal Grant 
Meeting with Governor King 
Manzi/Masiel lo Trial 
The Federal Grant 
The State Budget 
Agreement with the Governor 
Amendments to the Resolve 
Discussion of Hearings 
The Systems Reform Program 



1 
1 
2 
4 
6 
3 
10 
13 
15 
16 
19 
22 
23 
24 
27 
29 
32 
35 
35 
39 
41 
43 
44 
46 
48 
49 
49 
55 
57 
58 
59 



XXXV 1 1 1 



More Budget Delays 

Governor Recommends Funds 

Plans for Reform 

Budget Problems Loom Again 
Debate of the Proposed Amendments 

Amendments Approved By House 

Amendments Passed: Sent to the Governor 

Executive Message to the Legislature 

Amendment Rejected: Governor Signs 

Back to Business: Development of Proposals 

Preparations for Filing 
Investigative Methods 

Campaign Law and Campaign Finance Reform 
The Filing 

Committee Consideration 
Further Campaign Research 

The Administration Committee Hearing and the Debate Whether to Debate 
The Public Hearings 
Campaign Bill Drafting Eegins 

Administration Committee Work on the Legislation 
DiCarlo Appears in Public Hearing 
.Legislation Moves Slowly 
Public Perception of the Hearings 
harold Greene Challenges Commission Subpoena 
Still No Commitment on the Legislation 
Campaign Reform Bill Filed 
Calls For Action on Bills 

Decision to Reauest Extension of the Commission 
Meeting with Legislative Black Caucus 

Testimony on the Inspector General Concept 
Mark Up of Inspector General Bill 

Testimony of William V. Masiello 

Extension/ Inspector General Voted Out 

From Ways and Means To Prorogation 

Resolution Not To Prorocue 



60 
62 
62 
63 

65 
66 
70 
71 
74 

75 
77 
78 

34 

36 

88 

90 

92 

97 

100 

101 

103 

106 

107 

109 

111 

113 

114 

117 

113 

120 

122 

124 

123 
129 
130 



XXXI X 



$300 Million Repair Estimate 

Ways and Means Hearing on Inspector General 

MacKenzie Testifies 

Manzi to Testify 

Peabody Ordered to Comply 

Testimony on Defective Euildings 

Compromise and Conflict on the Inspector General Bill 

Greene to Charles Street Jail 

Calls for Admission of Campaign Bill 

Inspector General Passes the House 

Greene Appears Before Public Hearing 

Campaign Bill Admitted 

Construction Reform Reaches the Floor 

Commission Meets With Leadership 

Election Laws Hearing on Campaign Bill 

Prorogation 

House Passes Construction Bill 

Committee Work on Campaign Bill 

Senate Passes Construction Bill 

Conference Committee on the Inspector General 

Conference on Construction Reform 

Bills to the Governor's Desk After Surreptitious Alterations 

Bribery Bill to King 

House Votes Cown Campaign Reform 
Coletti Challenges the Commission 

King Signs Commercial Bribery and Construction Bills 
The Final Months 

The Final Report 
Referrals 

Conflict of Interest Laws of Massachusetts 

Campaign Finance Laws of the Commonwealth 

Perjury 

Feaeral Hobbs Act 

Federal Mail Fraud 

Other Relevant Criminal Statutes of the Commonwealth 



131 
133 
133 
134 
136 
137 

138 

140 
141 

142 
143 

143 

146 

147 

148 

152 

153 

154 

155 

155 

158 

161 

162 

163 

165 

165 

166 

166 

172 

173 

174 

175 

175 

176 

176 



xl 



Cngoing Investigations 

legislation 

Events in Court 

Inspector General Appointment Deadlocked 

Legislation for Consideration in 1981 

Coletti 

Campaign Report 

Final Report 

Financial History of the Special Commission 

Staff Photograph 

SEPARATE VIEW 



177 
177 

178 
180 
180 
180 
180 
180 
181 
184 



Separate View of Commissioner and Attorney General 
Francis X. Bel 1 otti 



186 



xli 



VOLUME 



FOOTNOTES FOR VOLUMES III, IV, V, VI, and IX 



Volume III 



Volume IV 



Volume V 



Volume VI 



Volume IX 



Findings in Individual Cases: Award of Design Contracts 2 

A New Campus for Holyoke Community College 3 

Masiello 10 

The Award of Design Contracts: An Overview 34 

Administration & Finance 35 

Desmond & Lord 62 

Suppl i ers 

Suppliers 71 

Driscoll Weber 79 

TestingConsultants 86 

Influence Exercised on Administrative and Legislative Action 88 

Neutralizing Supervision 88 

f'asiello & Associates, Senator James A. Kelly, and the 

Legislative Process 90 

The J. A. Sullivan Corporation and the BBC 102 

Laundering Improper Campaign Contributions 105 

Construction Defects, State and County Buildings 108 

Introduction 109 

Cape Cod Community College 115 

Salem State College Library 117 

Southeastern Massachusetts University 118 

Bridgewater State College 120 

Boston State College 122 

University of Massachusetts/Amherst Library 123 

Tillson Farm Power Plant 127 

University of Massachusetts/Boston, Columbia Point 130 

University of Massachusetts/Worcester 131 

Pondville Hospital 135 

Haverhill Parking Garage 137 

Worcester County Jail 138 

Hingham District Courthouse 140 

University of Massachusetts Building Authority 141 

McCarthy Apartments, Melrose 143 

Randolph Housing for the Elderly 146 

The Commission's Narrative 148 



x 1 i i 



VOLUME XI 

DOCUMENTARY APPENDICES 
TO VOLUMES II , III , IV, V, AND VI 

MBM Investigation 

Masiello: If a Hand Is Open 

The Award of Design Contracts: an Overview 

Suppl iers 

Driscoll Weber 

The J. A. Sullivan Corporation and the BBC 

Laundering Improper Campaign Contributions 

Construction Defects: State and County Buildings 

Cape Cod Community College 

Salem State College: Library Building 

Boston State College: Tower Building 

Southeastern Massachusetts University: Physical Education Building 

Bridgewater State College: Athletic Fields 

University of Massachusetts/ Amherst: Library 

University of Massachusetts/Amherst : Tillson Farm Power Plant 

Pondville Hospital 

Worcester County Jail 

Hingham District Court House 

University of Massachusetts Building Authority 

Melrose Housing Authority: McCarthy Apartments 

Randolph Housing Authority: Housing for the Elderly 



Because of cost considerations, Volume XI has not been reproduced 
in multiple copies. It is, however, available for inspection at 
the Office of the Clerk of the House of Representatives. 



=1 • ■ ■ 

Xl 1 1 1 



VOLUME XII 



FOOTNOTES AND APPENDICES 



THE SYSTEM OF PUBLIC CONSTRUCTION IN MASSACHUSETTS 



CAMPAIGN FINANCE 



THE SPECIAL COMMISSION IN COURT 



Table of Contents 



FOOTNOTES 



THE SYSTEM OF PUBLIC CONSTRUCTION IN MASSACHUSETTS 

Introduct i on 

The Scope and Nature of the Commonwealth's Capital Investment Program 

Formal Organization and Processes 

Capital Planning and Budget 

Results of Capital Planning 

Specific Systemic Problems in the Capital Planning Process 

Solutions to Specific Problems 

Reviews of Plans and Requests 

Real Property Management 

Programmi ng 

Designer Selection 

Design 

Construction Bidding 

Contractor Qualifications 

Access to Public Contracts 

Project Management 

Maintenance and Repair 

Record Keeping 

CAMPAIGN FINANCE 



1 

1 

1 

1 

2 

2 

4 

5 

7 

8 

9 

13 

14 

17 

19 

19 

22 

23 

25 



THE SPECIAL COMMISSION IN COURT 



26 



xl i v 



APPENDICES TO VOLUMES 7 and 3: 



Appendix to Designer Selection : 

-Distribution of Work Among Designers, Department of 
Community Affairs, Elderly Housing Projects, 1968-1979. 

Appendix to Subcontractor Selection : 

-Report of the General Services Administration Advisory 
Panel on Subcontractor Listing, December 1977. 

-Data from the Massachusetts Department of Public 
Works on the Cost of Filed Sub-bid Projects. 

-Letter from Joseph M. Corwin to President Jimmy Carter, 
On Behalf of the American Subcontractors of Massachusetts, 
June 23, 1977. 

-Recommended Legislation, "Construction Accountability Act." 

Appendix to Contractor Qualifications : 

- "Contractor Performance Evaluation," New Jersey Division 
of Building Construction. 

Appendix to Access to Public Contracts : 

-"Minority Business Certification Application," Massachusetts 
Department of Commerce and Development, State Office of Minority 
Business Assistance. 

-"Rules, Regulations, Procedures and Criteria Governing the 
Certification and Decertification of Minority Business 
Enterprises," Massachusetts State Office of Minority 
Business Assistance. 

Appendix to Recommended Budget : 

-Comparison of Cost of Commission Proposal for 
Division of Capital Planning and Operations and Current 
and Projected Costs of Existing System. 

Appendix to Campaign Finance : 

-Section by Section Summary of Campaign Finance Bill. 

-Recommended Campaign Finance Legislation: "An Act to 
Further Regulate the Reporting and Disclosure of Campaign 
Contributions and Expenditures and to Provide for Partial 
Public Financing of the Political Campaigns of Certain 
Candidates for Public Office." 

Appendix to Enforcement : 

-Recommended Legislation: "An Act to Increase the Political 
Independence of the Office of Inspector General." 

Appendix to Systems Issues and Findings : 

Additional Recommended Legislation 

-"An Act Affecting the Powers and Duties of the Inspector 
General . " 

-"An Act to Clarify the Powers and Duties of Certain State 
Officers . " 

-"An Act to Improve Capital Outlay Budget Planning." 

-"An Act Relating to the Status of Certain Personnel." 

-"An Act Clarifying Section 67A of Chapter 266 of the 
General Laws . " 



29 

33 
40 

48 
49 

56 



62 



93 



107 



115 



168 



170 

173 
179 

181 
185 



MEMBERS OF THE SPECIAL COMMISSION 



CONCERNING STATE AND COUNTY BUILDINGS 






FRANCIS X. BELLOTTI 




Francis x. Bellotti was first elected to the Office of Attorney General of 
the Commonwealth of Massachusetts in November of 1974. He has continued in that 
pos it ion, gaining re-election in 1978 by the highest plurality in the history of 
the State. His administration has been characterized by his aggressive 
prosecution of arson in Suffolk County, state tax evaders and fraudulent Medicaid 
providers. The Attorney General's Public Protection Bureau has promulgated 
regulations concerning debt collection and used car sales, while actively 
enforcing the State's consumer protection laws. Mr. Bellotti previously neld the 
office of Lieutenant Governor of Massachusetts from 1963 to 1964. 

A graduate of Boston English High School and Tufts University, Frank Bellotti 
served as a Lieutenant J.G. during world War II. After completing his tour of 
dutv, he studied at Boston College Law School, earning his degree in 1952. 
Thereafter, Bellotti became one of the State's outstanding trial attorneys. He 
gained the respect of his clients and the legal community, authoring numerous 
articles and lecturing on trial preparation and tactics. 

Bellotti currently serves as the Chairman of the Criminal History Systems 
Board, the Committee on Criminal Justice, the Organized Crime Control Council and 
the Committee on Privacy and Consumer Rights. 

Bellotti lives in Quincy with his wife Margarita and their twelve children. 




FRANCES BURKE 



Frances Burke was chosen by the Secretary of State to fill the position on 
the SDecial Commission Concerning State and County Buildings reserved for a 
person who has never served in the Legislature. She is a Professor at SuffolK 
University School of Management. 

Burke received her Ph.D. from Boston University in 1974, and has taught at 
Boston University, Metropolitan College, Stonehill College and Tufts University. 
She has for many years also worked as a management consultant to business, 
industry and government. 

Burke has served in various appointed and elected capacities within her 
field. She is a trustee of Southeastern Massachusetts University in Dartmouth, 
Council member of Pi Alpha Alpha of the National Association of Schools of Public 
Affairs and Administration, and was recently appointed to Project 87 , a national 
interdisciplinary research group preparing for the Bicentennial of the 
Constitution. Burke is also an active member of the American Society for Public 
Administration, the American Political Science Association, the Association of 
State and Local Management Analysts, and the Policy Studies Organization. 



In 1977, BurKe received the "President's Award" from the Massachusetts 
Chapter, American Society for Public Administration. She also nad received, in 
1975, the Puolic Citizen Award from ASPA for distinguished service to the 
Commonwealth and the region. 



PETER FORBES 




Peter Forbes, American Institute of Architects (AIA), was appointed to the 
Special Commission as the architect member by State Auditor Thaddeus Buczko. 
Forbes is the president of the architectural firm of Peter Forbes and 
Associates. In accordance with the dictates of the enabling legislation, Forbes 
and his firm have engaged in no state or county work, and work almost exclusively 
in the private sector. 

Forbes' experience is both as practitioner and theorist. He is head of a 
design firm actively engaged in projects in many parts of the country and was 
recently the recipient of the "Young Professionals Award" presented annually oy 
Building Design & Construction magazine. 

He has also been a lecturer in Design, Theory and History at Harvard 
Univers tv Graduate School of Design, the Boston Architectural Center, the 
University of Virg in ia, Darden School of Business Administration, Yale University 
and the University of Michigan. He was a participant and consultant to the 
United Nations Conference on Human Settlements, Vancouver, 1976. 

Forbes graduated from Phillips Exeter Academy, Exeter, New Hampshire, the 
Universitv of Michigan (Bachelor of Architecture) and Yale University (Master of 
Architecture). He is a member of the American Institute of Architects, the 
Boston Society of Architects, and is life member in the Society of Architectural 
Historians . 

He holds the Certificate of the National Council of Architectural 
Reqistration Boards, and is a registered architect in the Commonwealth of 
Massachusetts and additionally in Maine, Rhode Island, New Yotk, Virginia, 
Michigan, Nevada, and California. 

Forbes is an enthusiastic amateur athlete, actively sailing and competing in 
every known racquet sport from squash to the arcane game of Court Tennis. 




DANIEL 0. MAHONEY 



Daniel 0. Mahoney of Marblehead was appointed to the Commission by tne 
Governor upon nomination by the Pres ident-Elect of tne Massachusetts Bar 
Association. He is a senior partner in the Boston firm of Palmer and Dodge. 

Mahonev has been engaged in the general practice of law with Palmer and Dodge 
for 27 years except for his period of military service. His practice has been 
principally in the trial of civil cases and in the fields of insurance and nealth 
care law. He graduated from Williams College in 1950 and from Harvard Law School 
in 1953. He served as First Lieutenant and Captain, Judge Advocate General 
Corps, United States Army Reserve from 19 54 througn 1957. 

Mahoney is a member of the Massachusetts and American Bar Associations and a 
fellow of the Massachusetts Bar Foundation. He is Treasurer of the Massachusetts 
Bar Association, Chairman of the Budget and Finance Committee, and a member of 
the Executive Committee and Board of Delegates. Mahoney is Trustee and Vice 
President of the Salem Hospital, Trustee and President of the Tower School in 
Marblehead, and member of the Executive Committee and former President of tne 
Williams College Alumni Association of Boston. 



Mahoney has served for many years as Secretary and General Counsel to Blue 
Shield of Massachusetts, Inc. He has been interested in the development of 
prepaid legal services plans and is the principal draftsman of the Massachusetts 
statute governing such plans, Chapter 1764 of the General Laws enacted in 1977. 
He is married to Nancv Miller Mahoney and has four children. 




walter J. McCarthy 



Walter J. McCarthy was appointed to the Special Commission as the engineer 
member by State Auditor Thaddeus Buczko. Since 1973, ne has Deen Professor of 
Civil Engineering at Southeastern Massachusetts University in North Dartmouth. 
In that capacity, he guided the implementation of the first program in Construction 
Manaaement Engineering in the eastern United States. In 1978 fellow faculty 
members honored him with the Sullivan Award as the University's outstanding 
teacher . 

McCarthy graduated from the Massachusetts Institute of Tecnnology with a B.S. 
in Civil Engineering and from Northeastern University with an M.S. in Engineering 
Management. He is a registered professional engineer in the Commonwealth of 
Massachusetts and the State of New York. 

He began his career as a field engineer on the construction of MDC sewer 
tunnels, served as a design and office engineer on the construction of a reactor 
development facility, and was employed as a construction engineer for a puolic 
utility and as chief engineer for a construction materials manufacturer. He tnen 
served as a construction management consultant for Harbridge House, Inc. where he 
specialized in construction procurement and the development and implementation of 
planning, scheduling, and control systems for major facilities construction. 

In 1968 he became President of George Madsen Construction Company of 
Minneapolis. He later also founded and became President of Management and 
Construction Services Corp. These firms assumed a leadership role in the 
implementation of modern construction management concepts on complex projects and 
pioneered fast-track construction and the use of the computer as a construction 
management tool . 

He is a member of the Massachusetts Society of Professional Engineers and the 
American Institute of Constructors. He is married to the former Janet 
Ohrenberger, has three children and resides in Scituate. 



JOHN WILLIAM WARD 




John William Ward was named Chairman of the Commission oy the Governor of 
Massachusetts in May 1978. Mr. Ward had been President of Amherst College until 
June 30, 1979 when he announced his resignation. Before becoming President of 
the College, Mr. Ward had been a Professor of History and American Studies at 
Amherst College. He came to the Faculty of Amherst College in 1964 from 
Princeton University where he had been Chairman of the Special Program in 
American Civilization and a professor in the Department of History. 

Mr. Ward has twice (1958,1968) been a John Simon Guggenheim Memorial Fellow 
and was in 1963 a Fellow of the Center for Advanced Study in the Behavioral Sciences 
at Stanford. In 1968, he was Fulbright Lecturer in U.S. History at the 
University of Reading, England. In 1970, he was selected as Phi Beta Kappa 
Distinguished Lecturer to visit several American college campuses. Just before 
his election as President of Amherst College in 1971, Mr. Ward was named the 
William R. Kenan, Jr. Professor, an honor conferred upon "a scholar-teacher of 
distinction whose enthusiasm for learning, commitment to teaching, and interest 
in students will make a notable contribution to the undergraduate community." 

Mr. Ward is an historian, the author of books and many articles on American 
intellectual and cultural history. His books are Andrew Jackson: Symool for an 
Age (Oxford, 1955) and Red, White and Blue: Men, Books, and Ideas in American 
Culture (Oxford, 1969). He edited, for the John Harvard Library of tne Harvara 
University Press, Frederick Grimke, The Nature and Tendency of Free Institutions 
(1968), and was co-editor of an eight-volume series, "Documents in American 
Civilization" (Anchor Books). He has written introductions to many books and 
published more than forty articles in such journals as The American Scnolar , 
American Quarterly , The Yale Review . He nas written book reviews for scnolarly 
journals and also for The New York Review of Books, The New Yor* Times and The 



Washington Pos t . 

Mr. Ward was born in Boston, December 21, 1922. He attended the Boston Latin 
School where he was captain of the football team. He went to Harvard College 
which he left at tne end of his freshman year to enlist in the United States 
Marine Cotds (1942-1946). As an enlisted Marine, he became corporal, was later 
commissioned, served as an officer of the Marine Detachment aboard the flagship 
of the Atlantic Fleet, the USS Augusta, and was discharged after the war as a 
first lieutenant. 

After graduation from Harvard in 1947 as a member of the Class of 1945, Mr. 
Ward earned his M.A. and Ph.D. degrees from the University of Minnesota. From 
1952 to 1963, he taught at Princeton University where he was first Professor of 
English, then Professor of History and Chairman of the Special Program in 
American Civilization. Mr. Ward is a member of the American Historical 
Association and the American Studies Association. He is also a Councilor for the 
American Antiquarian Society. 




LEWIS WEINSTEIN 



Lewis H. Weinstein was appointed to the Commission by the Secretary of 
State. He is senior partner in the Boston law firm of Foley, Hoag & Eliot, 
having been graduated from Harvard College (where he taught mathematics) in 1927, 
and Harvard Law School in 1930. 

Weinstein taught Trial Advocacy at Harvard Law School for sixteen years and 
the Law of Land Use and Planning at MIT for eight years. He has also lectured at 
manv other institutions, such as the New England and Practicing Law Institutes 
and the National Institute of Trial Advocacy in Boulder, Colorado. 

Of his three and a half years in the military service, he was overseas for 
almost three vears and, after landing in Normandy, was General Eisenhower's 
Liaison Officer to General DeGaulle, and later Chief of the Liaison Section of 
the European Theatre of .Operations. He was awarded the Frencn Legion of Honor 
and the Croix de Guerre with palm, the Legion of Merit, and other citations. 

His legal career included four years as Assistant Corporation Counsel for the 



8 

City of Boston under his late partner, Henry E. Foley, where he worked on cases 

claiming re f unds of kickbacks by former Mayor James M. Curley and secret profits 
by his City Treasurer, Edmund Dolan. In the former - after a radio appeal - 
Curley reoaid the Ci.ty more than $85, 000, and Dolan's surety company repaid the 
City about $180,000. His legal career has included not only suostantial 
litigation, but he was an active advocate in the fields of urban renewal, local 
taxation ''especially of utility, industrial and commercial properties), eminent 
domain, utility rate cases and construction litigation (including that brought oy 
the Associated General Contractors when he was its general counsel). 

Weinstein has been a member of a number of legislative and administrative 
commissions (including the State Commission on Deseqreqati on in Public Schools), 
and others dealing with ant i -discrimination legislation in housing, employment 
and education. He has served as counsel for the Massachusetts League of women 
Voters, as well as numerous national, industrial and commercial firms, banks, 
insurance companies and individuals. He was chairman of tne State Emergency 
Housing Commission, wrote the first Massachusetts "snob zoning" and urban 
legislation, and also served as chairman of the State Board of Housing and 
Massachusetts Housing Council. 

He served as the law head of the major Jewish national "umbrella" 
organizations: tne Conference of Presidents of Major American Jewish 
Organizations, the National Jewish Community Relations Advisory Council, the 
Council of Jewish Federations, and the National Conference of Soviet Jewry, and 
in- Boston, among many others, as president of the Hebrew College, Combined Jewish 
Philanthropies and Jewish Community Council. 

Weinstein is a Fellow of the American Bar Foundation and the American College 
of Trial Lawyers, and a member of the American Law Institute. 




ancis x. bellotti 
ances burke 
ter forbes 
vniel o. mahoney 
alter j. McCarthy 

)HN WILLIAM WARD (Chairman) 
WIS H. WEINSTEIN 
kNCROFT LITTLEFIELD, JR. 
(Chief Counsel) 



SUtp (£mmtumw?tiltli of ilafiaarlfUBFttB 

SPECIAL COMMISSION CONCERNING STATE AND COUNTY BUILDINGS 
JOHN W. McCORMACK STATE OFFICE BUILDING, ROOM 1601 
ONE ASHBURTON PLACE, BOSTON 02108 
Telephone (617) 727-1270 



December 31, 1980 



ACKNOWLEDGMENTS 



In any complex investigation, extending over more than two 
years and eight months, innumerable people must give their help 
and support if an investigation is to be a success. One of the 
most heartening things about the work of the Special Commission 
Concerning State and County Buildings has been the ready willing- 
ness of so many to assist the Commission. We truly cannot remem- 
ber a single instance when the Commission asked for help and was 
refused. 

There are dangers in acknowledging the help of particular 
individuals and organizations. First, one may imply that the 
contributions of some people are more important than others. 
The work of the Special Commission was truly a collective enter- 
prise. Each contributed to the work of the whole, from the firm 
but friendly Capitol Police who maintained strict decorum at 
public hearings, to Dr . An Wang who provided from his corporation, 
pro bono , word-processing equipment and service. Second, one may 
forget someone inadvertently, and cause hard feelings. Third, in 
the sheer length of the catalogue of names of those to whom one 
owes so much, one's thanks may come to seem pro forma, simply 



conventional. Not so. The Commission owes much to many. Its 



10 



only regret is that it is physically impossible to thank each 
individual directly and personally. 

The Commissioners recognized from the start that the single 
most important decision they would make over the entire life of 
the Commission was the selection of the Chief Counsel. The best 
measure of thanks the Commissioners can pay Bancroft ("Nick") 
Littlefield, Esq., is to say that it was not only the most im- 
portant decision, it was the best decision the Commission made. 

With Chief Counsel the Commission recruited the finest legal 
and investigative and research staff which has been put together 
in the history of the Commonwealth. The attorneys who served 
over the life of the Commission as Deputy Chief Counsel were the 
first staff members hired after Chief Counsel, and provided re- 
markable service in all stages of the Commission's work. They 
are: Thomas E. Dwyer, Richard McCarthy, John Pappalardo, Michael 
Tabak and Michael Tracy and Associate Counsel Natalea Skvir. Work- 
ing together, to be sure, the Commission's staff were organized into 
two main groups, an investigative unit and a legislative unit, in 
accord with the Commission's mandate to investigate corruption and 
to make legislative recommendations for the future. Each unit 
required different skills; both were superb: 

Lawyers on Investigations: 

Thomas E. Dwyer, Executive Director and Deputy Chief 
Counsel, Richard McCarthy, Deputy Chief Counsel, John 
Pappalardo, Deputy Chief Counsel, Michael Tabak, Deputy 
Chief Counsel, Michael Tracy, Deputy Chief Counsel, Natalea 
Skvir, Associate Counsel, Investigations, Barbara Milman, 
Associate Counsel, Systems and Investigations, Susan Beck, 
Associate Counsel, Investigations, Jeffrey Auerhahn, 
Associate Counsel, Investigations, John Brophy , Associate 
Counsel, Investigations, David O'Connor, Associate Counsel, 
Investigations . 



11 

Lawyers on Legislation: 

Jonathan Bockian, Associate Counsel, Systems, Larry 
Beeferman, Associate Counsel, Systems, Jane Alper, Associate 
Counsel, Systems, Terry Mond , Associate Counsel, Systems 
and Investigations. 

Behind the legal staff lay the heart of the organization: CPA's, 
former IRS and FBI investigators, those who reconstructed what hap- 
pened and followed the tortuous trail of paper which finally made 
the investigations concrete and particular and so compelling. 

Richard Krant, Chief Investigator, Robert McAuliffe, 
Senior Financial Investigator, Charles McNally, Senior 
Financial Investigator, James O'Neill, Senior Financial Investigator, 
Richard Reale, Senior Financial Investigator, Harold Smith, 
Senior Financial Investigator, Charles Audette, Financial 
Investigator, Howard Dacey, Investigator (assigned by Boston 
Police Department) , Joseph Dempsey, Financial Investigator, 
James Deveney, Technical Consultant, Al Hoban, State Police 
Investigator, Bill Horgan, State Police Investigator, Robert 
Jubinville, State Police Investigator, Edward Kelly, 
Investigator, George Landry, Investigator, Timothy Leonard, 
Financial Investigator, Jerome McCallum, Investigator, 
Robert Mel ley, Financial Investigator, Robert Patenaude, 
Investigator (assigned by Metropolitan District Commission) , 
Grace Pan, Financial Investigator, James Siracusa, Financial 
Investigator, Patrick Ward, Investigator (assigned by Secretary 
of the Commonwealth) , Gary Burns, State Police Investigator, 
John Connors, Financial Investigator, John Woollett, Technical 
Consultant. 

Then, the paralegals and editors. 

Christine Aposhian, Legal Assistant, Final Report, Dean 
Askin, Legal Assistant, Systems, Alison Bell, Legal Assistant, 
Investigations, Nancy Brigham, Editor, Final Report, Dirk 
Buikema, Legal Assistant, Investigations, Eric Bryant, Legal 
Assistant, Investigations, Barbara Buck, Writer/Editor, 
Final Report, Donald Burnham, Legal Assistant, Final Report, 
Thomas Curley, Legal Assistant, Investigations, Jane Current, 
Writer/Editor, Final Report, Mark Demorest, Legal Assistant, 
Investigations, Nancy Dolberg, Legal Assistant, Systems, 
Andrew deMars, Legal Assistant, Investigations, Betty Krier, 
Legal Assistant, Final Report, Mary Lewis, Legal Assistant, 
Peter Mitchell, Legal Assistant, Investigations, Julie 
Marston, Legal Assistant, Final Report, Jeffrey Oliver, 
Legal Assistant, Investigations, Robert Richardson, Legal 



12 

Assistant, Investigations, Richard Read, Legislative 
Aide, Campaign Reform, Final Report, Randall Short, 
Legal Assistant, Investigations, Thomas Neely, Investi- 
gator, Gilbert White, Legal Assistant, Investigations, 
Bill Cohn, Production Manager, Final Report, Marcia 
Fernald, Editor, Final Report, Ann McCabe , Legal Assist- 
ant, Peter Vitale, Legal Assistant (assigned by Attorney 
General), Joseph Zelan, Editor, Final Report. 

Within the Commission, also were the administrators, secre- 
taries and receptionists who, by some miracle, were able to 
keep their sanity and their humor under the unremitting demands 
placed upon them by a staff always under the pressure of some 
new deadline. 

Rachel Lapointe, Personnel Officer, Lea Snow, 
Financial Administrator, Phyllis Boffitto, Administrative 
Secretary, Nancy Earsy, Administrative Director, Donna 
DeBenedictis , Administrative Assistant, Roberta Longley, 
Office Manager, Denise Milroy, Executive Secretary, 
Diane Sousa, Legal Secretary, Eunice Donnelly, Secretary, 
John Damtoft, Systems Manager, Leslie Fields, Word Pro- 
cessing Supervisor, Maxine LaFosse, Secretary, Gregory 
Lippolis, Manager Information Systems, Myra Ten Huisen, 
Receptionist, Shirley Thomas, Secretary, Mona Tucker, 
Secretary, Claudia Buser, Word Processor, James McGill, 
Word Processor, Marjolyn Nieuwkerk, Word Processor, James 
Poku, Word Processor, Martha Savio, Programmer, Ana Rosa 
Torres, Word Processor, Frances Vinyard, Typist. 

Beyond the Commission's own staff, a myriad of groups, rang- 
ing from representatives from state agencies to ad hoc volunteer 
groups around a particular issue, were of immense help: 

Full and Part-Time Auditors Assigned to The Special 
Commission From the Office of State Auditor 

Thaddeus Buczko 

James Allen, Richard Antennucci, Ann Bobbitt, Sal 
Camuglia, Albert Carnevala, Alfred Castantini , George 
Cordima, Tia Jenkins , Daniel Keeler, Karen Kelleher, 
James Kevin Lambert, Vinh Luong, Frank Luzinski, John 
Maguire , Walter Martin, William Newell, John Shaughnessy, 
Joseph Shea, Lauri Stein 



13 



Resource Groups 

Public Construction Procurement Systems Resource Group 

Julius Abrams, General Contractor, owner Abrams Construction 

Co., former member DSB 
Sumner Abrams, Engineer, Director, Physical Plant, Brandeis 

Univ., Former member Gov't Center Commission 
Urs Gauchat, Architect, Associate Prof. Architecture, Harvard 

School of Design 
Edgar Gilbert, Engineer, Senior Project Manager, Arthur D. 

Little, Inc. 
John Kennedy, Engineer, Construction Mgr., Walsh Bros., Inc. 
Dr. Raymond E. Levitt, Engineer, Assoc. Prof., Civil Engineering, 

MIT Head of Construction Engineering & Project Mgt. Groups, 

MIT. 
William Murphy, Engineer, former Director Physical Plant, Harvard 

University, V.P., N.E. Mutual Life Insurance Co. 
Mayer Spivack , Director , Unit of Environmental Analysis & Design, 

Harvard Medical School 

Campaign Resource Group 

Jeffrey Berry, Pete Castagnaro, Dick Cauchi, Charles Doherty, 
Director, Office of Campaign & Political Finance, Catherine 
Fallon, League of Women Voters, Elizabeth Fay, Common Cause, 
John Grace, State Secretary's Office, James Gutensohn, Exec. 
Director, Ethics Commission, Scott Harshbarger, Gen. Counsel, 
Ethics Commission, Thomas Kiley, First Assistant Attorney 
General, Mindy Lubber, Mass PIRG, Francis Lapointe, State 
Secretary's Office, John Martilla, Martilla, Paine, Kiley & 
Thorne, Julie Perkins, League of Women Voters, Peter Robertson, 
State Secretary's Office, Robert Stewart, Hutchins & Wheeler, 
Craig Stepnoe , Bill Sullivan, Michael Tatel, Daniel Taylor, 
Hill & Barlow, Margaretta Thuma , League of Women Voters 

Public Managers Group 

Edward Capodilupo, Esq., Contracts Attorney, Mass Port Authority 
Anthony Cicere, Engineer, Contracts Administration for the Port 

Authority 
Stephen Demos, Chief Architect for Dept. Community Affairs 
Foster Jacobs, Engineer, Dir. Physical Plant, Southeastern 

Mass. Univ. 
James Kerr, Chief Engineer, Dept. of Mental Health 
Stuart Lesser, Architect, Dir. of Bureau of Bldg. Construction 
John J. McGlynn, then Supervisor of Public Records in the State 

Secretary's Office 
David Nee, Dir. of Development, Dept. of Corrections 
Frederic Putnam, Dir. of Devel., Cambridge Housing Authority 
John Snedeker , Former Commissioner MDC 
James Tierney, Deputy Chief Engineer, Dept. of Public Works 



14 

Edward Vaughn, Deputy Commissioner for Central Services, 

Exec. Office of Admin. & Finance 
John vonSchlegell, Executive Office of Human 

Services 
Stephen Weiner, Chief Engineer, Mass Port Authority 
Dr. Albert Whitaker, Director, Archives Division, State 

Secretary's Office 

Construction Industries Council Liaison Committee 

Pat Alibrandi, Chairman, Mass CIC Committee; President, 

Interstate Electric Service Co.; rep., Associated Builders 

& Contractors 
Albert Bonf atti , Rep., Associated General Contractors, and 

Pres. , Bonf atti Construction Co. 
Philip Mitchell, Rep., Construction Industries of Mass. 
Leo Reed, Exec. Secretary, Bldg. Trade Employees Assn. 
Douglas Cole Smith, Representative, Mass. State Assoc, of 

Architects 

Committee of the Massachusetts State Association of Architects 
Boston Society of Architects, Mass PIRG, Americans for 
Democratic Action, League of Women Voters, United States 
Department of Justice, Law Enforcement Assistance Administration, 
Massachusetts Committee on Criminal Justice, Massachusetts State 
Police, Capitol Police, Rudy Sibilio and the Staff of the 
McCormack Building 



Others 



Douglas Woodlock, 
Hugh Scott 



United States Attorney, Edward Harrington 
Assistant United States Attorneys 

D. Lloyd MacDonald, Michael A. Collora, 

Jeremiah T. 0* Sullivan, Kevin J. O'Dea, 
Federal Bureau of Investigation 

Special Agents in charge, Richard Bates and James Dunn 

James Ring, Special Agent 
Internal Revenue Service 

Brian Bruh , Special Agent 
Office of the Attorney General, Commonwealth of Massachusetts 

Albert Polgar, Paul A. Good, Alexander Gray, Thomas R. Kiley, 

Roland Lemois, Edward J. White, Stephen R. Delinsky 

Paula Muller Durant, Linda Johnson 
Secretary of the Commonwealth, Paul Guzzi 
Secretary of the Commonwealth, Michael Joseph Connolly, 

Joan Comer, Marcia Molay 
State Auditor, Thaddeus Buczko, Robert Ciolek, Peter Gavrilles 
State Comptroller, Robert Sheehan, Albina Giardiello, Rene 

Salvas, Josephine Towles , Payroll, John O'Connor 
Bureau of Building Construction, Stuart Lesser, Director 

Robert Garrity, Alphonse Binda, Marie Kelly, Peggy Kent, 

William Tibbetts, Bernard Lucey 
Department of Public Safety, Dennis Condon, Commissioner, 

Frank Tribucco, Commissioner 
Bingham, Dana & Gould, John J. Curtin, Jr., Daniel Goldberg 
Foley, Hoag & Eliot, Herbert L. Berman, Laurie Burt, 

Laurence H. Fordham, Michael B. Keating, Hans F. Loeser, 

Arthur G. Telegen, Marc Temin 
Palmer & Dodge, Russ V. V. Bradley, Jr., Gaylen D. Kemp 



14 

Edward Vaughn, Deputy Commissioner for Central Services, 

Exec. Office of Admin. & Finance 
John vonSchlegell, Executive Office of Human 

Services 
Stephen Weiner, Chief Engineer, Mass Port Authority 
Dr. Albert Whitaker, Director, Archives Division, State 

Secretary's Office 

Construction Industries Council Liaison Committee 



Committee; President, 
rep., Associated Builders 



Pat Alibrandi, Chairman, Mass CIC 

Interstate Electric Service Co. 

& Contractors 
Albert Bonf atti , Rep., Associated General Contractors, and 

Pres. , Bonf atti Construction Co. 
Philip Mitchell, Rep., Construction Industries of Mass. 
Leo Reed, Exec. Secretary, Bldg. Trade Employees Assn. 
Douglas Cole Smith, Representative, Mass. State Assoc. 

Architects 



of 



Committee of the Massachusetts State Association of Architects 
Boston Society of Architects, Mass PIRG, Americans for 
Democratic Action, League of Women Voters, United States 
Department of Justice, Law Enforcement Assistance Administration, 
Massachusetts Committee on Criminal Justice, Massachusetts State 
Police, Capitol Police, Rudy Sibilio and the Staff of the 
McCormack Building 



Others 



Douglas Woodlock, 
Hugh Scott 



United States Attorney, Edward Harrington 
Assistant United States Attorneys 

D. Lloyd MacDonald, Michael A. Collora, 

Jeremiah T. O'Sullivan, Kevin J. O'Dea, 
Federal Bureau of Investigation 

Special Agents in charge, Richard Bates and James Dunn 

James Ring, Special Agent 
Internal Revenue Service 

Brian Bruh, Special Agent 
Office of the Attorney General, Commonwealth of Massachusetts 

Albert Polgar, Paul A. Good, Alexander Gray, Thomas R. Kiley, 

Roland Lemois, Edward J. White, Stephen R. Delinsky 

Paula Muller Durant, Linda Johnson 
Secretary of the Commonwealth, Paul Guzzi 
Secretary of the Commonwealth, Michael Joseph Connolly, 

Joan Comer, Marcia Molay 
State Auditor, Thaddeus Buczko, Robert Ciolek, Peter Gavrilles 
State Comptroller, Robert Sheehan, Albina Giardiello, Rene 

Salvas, Josephine Towles, Payroll, John O'Connor 
Bureau of Building Construction, Stuart Lesser, Director 

Robert Garrity, Alphonse Binda, Marie Kelly, Peggy Kent, 

William Tibbetts , Bernard Lucey 
Department of Public Safety, Dennis Condon, Commissioner, 

Frank Tribucco, Commissioner 
Bingham, Dana & Gould, John J. Curtin, Jr., Daniel Goldberg 
Foley, Hoag & Eliot, Herbert L. Berman, Laurie Burt, 

Laurence H. Fordham, Michael B. Keating, Hans F. Loeser, 

Arthur G. Telegen, Marc Temin 
Palmer & Dodge, Russ V. V. Bradley, Jr., Gaylen D. Kemp 



15 
Others (continued) 

Wang Laboratories, Dr. An Wang, John Winters 

Digital Equipment Corp. 

Xerox Corp., Ron LeBlanc 

M.I.T., John B. Bidwell, Jean 3onney,Jose Antonio Torres, 

Kreon Cyros , Paul Gray, Weston J. Burner, Raymond E. Levitt 
Harvard University, Graduate School of Design 
Legislative Staffs, Dean Bouffard, Mark Ferber, Paul Menton , Kathleen 

Sullivan, Joseph Traynor, Greg Jarboe , Peg Ireland, Caroline 

Kuklinski 
Helen Patrick, Treasury, James Mandeville, Deputy State Treasurer, 
Andy Coffey, Budget Bureau, Margaret Hurley, Personnel Admini- 
stration, Tom Donovan, Personnel Administration, John McHugh, 
Personnel Administration, Imelda Leung, Group Insurance 
Commission, Jay Marshall, L.E.A.A., Washington, D.C., James 
M. Collins, Norfolk County Treasurer, Joseph Banville, A&F 
Data Processing Dept. , Robert Blakey, Former Chief Counsel, 
House Select Committee on Assassinations, Notre Dame Law 
School, Andrew Schaffer, Former Chief Counsel N.Y. State 
Moreland Commission on Nursing Homes & Residential Facilities, 
N.Y.U. , Raymond Quinlan, Physical Plant Staff, U. Mass Med 
Center, Worcester, Margo Ruth Roman -Auerhahn, D.V.M. , Joyce 
Francine Roman, Karen Morth & Yvonne Torres, Office of Civil 
Rights & Urban Affairs, E.P.A. , Marcella Lancoine, Director 
of Compliance, Massport, Walter Williams, Director, City of 
Boston, Office of Minority Business, Felix Sanchez & Carlton 
Dasent, General Counsel, State Office of Minority Business 
Assistance, David Harris, Director, State Office of Minority 
Business Assistance, Charles Townshend , Deputy Director, NJ 
Div. of Buildings & Construction, Joseph Febo, Prequalif ication 
Officer, NJ Div. of Buildings & Construction, Ruth Paven, 
General Counsel, Department of Labor & Industries, Ann McDonough, 
MBTA Contract Administration Division, Richard Friburger, Mgr . 
of Project Planning, Harvard Univ., Robert Thomas, Mgr. of 
Construction Mgt. , Harvard Univ., Harold Goyette, Director 
of Planning Office, Harvard Univ., Dan Schodek, Annie Howitt, 
Roger McLeod, Dir., Public Sector Div., Mass Commission 
Against Discrimination, Herbert Singleton, Equal Opportunity 
Officer, Bureau of Bldg. Construction, Russel J. Kennedy, 
Captain James Ford, Neil Jansens , Les Brown, Louis Perry, 
Clara Freedlender, William Marren, UMass Amherst, Foster 
Jacobs, SMU , Robert Pyne, Dept. of Community Affairs, 
Marshall Simonds, Former General Counsel, Mass. Crime 
Commission, Goodwin, Procter & Hoar, Boston, Mass., Pat 
Mathiason, Common Cause, Polly Jackson, League of Women Voters 
Albert Anderson, Mass Action, Violet Sieder, Mass Human 
Services Coalition, Paul Cruz, Cruz Construction, Robert 
McKay, Citizens Housing & Planning Association, Archibald Cox, 
Jack Dady, Jr. , Mass Society of Professional Engineers, 
Carl Sapers, Hill & Barlow, representing MSAA, James Meyers, 
Gadsby & Hannah, Ken Mosakowski, S.C.E.R.A. , Evan Johnston, 
S.C.E.R.A. , Philip Perlmutter, Jewish Community Council, 
Randy Komisar, Federal Trade Commission 

Systems Hearings Witnesses 

Louis Porzio, BBC, James Welch, BBC, James Cusack, BBC, Joseph 
Glynn, BBC, Harry Spence, Gelardin-Bruner-Cott , Inc., Joseph 
Kane, Esq., BHA, Barbara Manford, DCA, Stephen Demos, Chief 



16 

Systems Hearings Witnesses (continued) 

Architect, DCA, Foster Jacobs, Dir. Physical Plant, South- 
eastern Massachusetts University, John Kennedy, Walsh Bros., 
Inc., Robert Sheehan, Comptroller, Edgar Gilbert, Arthur D. 
Little, William Murphy, Vice President, New England Mutual 
Life, David L. Flynn, Board of Trustees of State Colleges, 
Sumner Abrams , Mayer Spivack , Julius Abrams , Joan Belle Isle, 
Bernard Schreiber, David Carlson, Architect, John Larkin 
Thompson, President, Blue Shield of Massachusetts, Inc., 
William Porter, Dean, MIT School of Architecture, John T. 
Kenny, CCE , R. S. Means Co., Inc., Robert Ciolek, Peter 
Gavrilles, Stanley Lupkin, New York City Commissioner of 
Investigations, Kurt Muellenberg, GSA Inspector General, 
Virginia Enos , Sydney Construction Co., Inc., Helen Moreschi , 
Susan Brophy, Women in Construction Project, John F. Dacey , Jr., 
Executive Director, Mass Society of Professional Engineers 

Finally, it is fitting we end with young people, student volunteers, 

students on work-study grants , student interns, and paralegals who 

volunteered their time; fitting because they represent the future. 

If the next generation has the enthusiasm, the interest in public 

service, and the capacity for hard work these young people showed, then 

there is hope for the future. 

Volunteers/Work Study Students, Student 
Interns and Volunteer Paralegals 

Amherst College 

Bill Snedeker 

Bentley College 

Dino Livolsi, Jeremiah Donovan, Mark Flionis, Michael O'Neil 

Boston College 

Michael Bodson, Chris Cooper, Caryn Dlott, Rosemary Traini , 
Peter Albert, Mary Ellen Amsler, Samuel Betar , Joseph Bongiorno, 
Nora Bottino, Edward Coleman, Curt Devlin, Mark Duzenski, 
Michael Fleishman, Robyn Frye , Jill Griesing, Harold Gorach, 
James Guerra , Christopher Hart, William Kickman, Thomas McGuire , 
Adel Mrusek, Alison Mitchell, Patricia Murphy, Mark Murphy, 
Michael Neuberger, Tracy Ryan, Anthony Scola, Nancy Stoddard, 
John O'Neill, Robert Shea, Antonia Tobin, Michael Lawlor, 
Gretchen Condon, Cynthia Atkins, Michael Bell, William Delaney, 
Stacy Hamilton, Cheryl Kune 

Boston College Law School 

Alice Kossoff, Sharon Lindley, George Mykulak, Christine 
Pendry, Linda Sanderson, Steven Wright, Andrew Alpert , John • 
McGivney, Ruth Kaplan, Louise Gessel, James Dalberg, Richard 
Convicer, Michael Cohen 

Boston State 

Patricia Noyes, Francine Salinger 



17 



Boston University 

Mark Seiko, Norby Zamora, Derek Young, Gregory Wysocki , 
Joseph Whalen, Joan Wisniewski, Mark Winston, Herlis Robert 
Tillman, Mark Spencer, Marie Skinnion, Gene Shwalb, Robert 
Stone, John Roback, Merle Pine, Marie Paratore , Carolyn Oliver, 
Patricia 1 Byrne, Stephen Montgomery, Charles Lukasik, Michael 
Lorigan, Michael Long, Darren Lindsey, Donna Jaszewski, Michael 
Hultquist, Susan Gyss, Jane Farrissey, Mary Eng, Jeffrey Davis, 
Mark Curry, John Cassidy, David Brodsky, Robert Acquaro , 
Chin, Ivar Leetma, Leigh Savidge, Terrence Burns, Libby 
Boucher, Stephen Ferszt, Steven Ng , Karen Fitzgerald 

Boston University Law School 

Mary Kathleen Yuscavage Clay, Ed Weiner, 
Ryan, Mark Reibman, Mark Goidell, Joseph 
Steven Adler 

Brown University 
Annette Eng 

Columbia University 
Irene Haase 

Harvard College 

Doris Balaconis, Robert 
Susan Blanc, Tom Miett, 
Steven Bleiber, Jeffrey 



Linda 



Gerri Sperling, John 
Devlin, Stacey Cannon, 



Culbertson, Jeff 
Corlis Jean Chan 
Blattner, Karrye 



Bromberg, John Caragozian, Ellen Collins 

Garvey, John Gennari, Felecia Green, Kevin Henderson, 

Johnson, Maximino Medina, Kevin McFarren , Nancy Page, 



Smith, Mark Tawater, 

William Garcia, 
Braxton , Howard 
Danny Ertel, John 

Kevin 
Andrea 



Present, Kevin Roberts, Emily Rothrock , George 
Stuart Smith, Mark Tremallo, Barbara Watson 

Harvard Law School 

Merril Hirsh, Tim ' Shaughnessy , Daniel Pinkston 

Harvard School of Design 

Frederick Biehle, Ann Bardeen, Michael 
William Scott Clark, Stephen Douglass, 
Fernandez, Charles Hanton, Gary Haney, 
Johnson, Konrad Kwok, Maureen Melville 



Scholomite 



Carter, Charles Carlin, 
Deborah Fennick, Henry 
Lorens Holm, Gary 
John Meder, Joseph 



Navarro, Ann Pitt, Ronnette Riley, Amy Semmes , Lynne Thorn, 

Steven Van Ness, Arthur Vogt, Paul Zemtozov 
Massachusetts Institute of Technology 

Janet Grzywacz, Frederick Smith, Daniel Packer 
New England School of Law 

Mark Goldrosen, Michael Wise, Patricia Norton, Peter Nadel, 

Georgianna McLoughlin, Joseph Maccarone, John Kenney , Linda 

Gavin, John Fitzgerald, Robert Filteau, Catherine Stenger, 

Melody Edwardson, Bill Cupelo, Colleen Brown, Domenical 

Bizzocco, Paul Barrett, Larry Beckenstein 
Northeastern University 

Douglas Williams, Mark Sattelberger , Stan Tolczko, Jim Bigelo, 

Loming Chan, Jerry Gruenbaum, Thomas Keller, Helena Long, 

Theodore Siggins 
Northeastern University Law School 

Cherly Brown 
Simmons College 

Monica Managami , Becky Houkel 
Suffolk University 

Francis Earley, Joseph Green, Gina 

Gary Serino, Deidra Kulevich, Greg 



Tucker, Charles Ajemian, 
Riley, Patrick Aiello, 



Carla Braxton, 
Mary McNeil 



Michael Lataille, John Damtoft, Fletcher Bishop, 



18 



Suffolk Law School 

Loretta Collins Tremblay, Joseph Rocha, Linda Poulos , Malka 

Grinkorn, Charles Floyd, David Darwin, Timothy Dreher , Donald 

Crawford, Lisa Cosentino, Marie Capelotti, Eileen Anderson, 

David Doyle, Richard Connors 
University of Massachusetts 

Robert McClelland, William Tagg, Robert Bennett, Dennis 

Walsh, Michael Stokes, Robert Hastry, Jay Gerbis , Grace 

D'Avalio, Linda Schofield 
Wellesley College 

Darlene Vale, Theresa Chin, Linda Seamons , Kathy Shandling, 

Pamela DeGaff 
Wheaton College 

Elizabeth Pope 
Yale University 

Jonathan Khan 

Others 



Vivian Hi lborn, Elaine Zetes, Kerry Sulkowicz , Paula McDonald, 
Patricia Steel, Brian Fern, Pat Leach, Barbara Holt, Roger 
Read, Claudia Shape, Mark Warner, Jane Reinhart, Pamela Trimble, 
Sharon Howell, Ellen Keefe, Ken Vitagliano, Candice Ahearn , 
Sandra Baldwin, Valerie Robinson, Noreen McHugh 



What We Have Learned: 
The Costs of Corruption 

On April 12, 1978, the Governor of the Commonwealth of 
Massachusetts signed into law Chapter 5 of the Resolves of 1978, 
which created a special commission to investigate allegations of 
corruption in the award of state and county building contracts, 
and to make recommendations for legislative and administrative 
reform. Two years, eight months and eighteen days later, with 
the submission of its Final Report to the General Court on De- 
cember 31, 1980, the Special Commission comes to an end. The 
Commissioners and their Staff are not, by definition, the ones 
to judge the worth of the Commission's work. We are the ones, 
though, to say we are proud of what we have done, proud enough 
to believe we have served the legislature and the people of the 
Commonwealth of Massachusetts well. Deeper than our pride is 
our belief that the end of the Commission is only a beginning, 
only one step on the road to an honest and decent public life in 
the Commonwealth of Massachusetts. 

We have learned much from the experience of the Commission, 
but the single, over-riding thing we have learned is the need 
for confidence by the citizens of Massachusetts in the conduct 
of their government. The depth of skepticism, sometimes to the 
point of outright cynicism, about elected and appointed public 
officials should be disturbing to private citizens, not just to 
the politicians. It is a measure of the alienation of people 
from government and of the erosion of the will to act as citizens 

To restore general confidence in public life means constant 

19 



20 

and unceasing attention to the particulars of public life, not 
grand pronouncements about the general good and civic virtue. 
The Final Report of the Special Commission is an ambitious re- 
port, a massive, detailed, narrative and critical history of the 
Commission's work which runs to several volumes and thousands 
of pages. Few will read it, and those few will probably read 
those chapters and sections in which they have a special inter- 
est. The Commission knows that. We are not naive. But neither 
did we believe that lofty general observations about the 
Commission's work would have much weight without the ballast of 
a detailed, empirical account of the particulars. To put it ano- 
ther way, we wished to leave behind a record, in the full, his- 
torical sense of that word, of the particulars of our work. 
The particulars are set, however, in a general design: 
I. First , what have we learned? 
II. Second , what have we proposed to do on the 
basis of what we have learned? 
III. Third, what do the first two say about politics 
and about the future? 



21 



In the award of design contracts for the construction of state 
and county buildings, we have learned that — 

o Corruption is a way of life in the Commonwealth 
of Massachusetts 

o Political influence, not professional performance, 
is the prime criterion in doing business with the 
state 

o Shoddy work and debased standards are the norm 

o The "system" of administration is inchoate and inferior 
CORRUPTION AS A WAY OF LIFE 

The final report of the Commission tells in detail a sad 
and sordid story. The story is not told with the glee of the 
muck-raker. It is told soberly and factually. No member of the 
Commission takes pleasure in the telling. The legislature man- 
dated the Commission to report on its findings, and we have. 
The purpose of the Report is to cause the legislature, and the 
general public to whom the legislature and the Commission are 
in the last analysis responsible, to take thought, to ask how 
our public life may be made better, be carried on in such a way 
that it may be possible to be proud to be a citizen of the Com- 
monwealth of Massachusetts. 

The particular facts of the Commission's long investigation 
comprise a general pattern: In the award of contracts for the 
construction of state and county buildings, corruption has been 
a way of life. For a decade at least, across Republican and 



22 

Democratic administrations alike, the way to get architectural 
contracts was to buy them. It was not a matter of few crooks, 
some bad apples which spoiled the lot. The pattern is too broad 
and pervasive for that easy excuse. There are, to be sure, honest 
and hard-working administrators in state agencies, underpaid at 
best, struggling to do their work well. There are earnest and 
diligent legislators laboring against the inertia of disbelief 
that politics can be an honorable calling. In numerical terms, 
such people are the majority in public life. But at those 
crucial points where money and power come together, the 
system has been rotten. 

The name of the game is cash. The work of the Special 
Commission offers a classic example of the investigation of white 
collar crime and political corruption. When bribes are paid or 
money is extorted, and the two are opposite sides of a single 
coin and hard to distinguish, there has to be cash. Ways to 
generate it are legion: "bonus" checks to employees who nego- 
tiate them and return the cash; false invoices from suppliers 
which appear as a deductible business expense even while the 
dollars come back; honoraria for consulting services never per- 
formed; fictional business entities through which money is chan- 
nelled. Behind every hearing by the Commission lies a tortuous 
trail of paper which requires skilled financial investigators 
to follow, by painstaking research, the reconstruction of a firm's 
records, the examination of bank records, the scrutiny of rolls 
of microfilm. 

What the Commission learned was the simple fact about 



23 



human nature that people are not intrinsically good or evil, 
but that circumstances it.ake them so. One grows into a way of 
life, becomes acculturated to it, as the anthropologist would 
put it. It is not a case of black and white. Individuals learn 
the customs of the country. One engineering consultant to ar- 
chitects told the Commission how it happens. At first, he was 
asked to buy a few tickets to a fund-raising event at fifty 
dollars each, a perfectly legal campaign contribution, so long as 
the money came from him and not the corporation. Then as business 
grew, the requests grew: a table for ten at a hundred dollars a- 
piece, a thousand dollars. Then the moment came when he was asked 
for his thousand dollars in cash, not check. The consultant knew 
that was illegal, but he rationalized his responsibility away by 
saying it was on the other fellow's conscience since he had 
told him it was a political "contribution." 

At that point, he had crossed the line. He had broken the 
law. When the next contract came up, he was told flatly he 
had to pay a 10% kickback on the gross price. For this particular 
engineer, that was too far. He refused. Never again did he 
receive a contract on state work. 

But too many crossed that line and stayed on the other 
side of it. Too many thought it was clever, the wise thing 
to do. So, over time, there grew a fraternity of business- 
men and politicians and public officials who, to their mutual 
profit, congratulated each other on how smart they were. 
Expense accounts, gifts, credit cards, vacations, trips to 
the Superbowl: These were the low roads to high liv- 



24 



ing. One bribe-giver described the pattern as the "cultivation" 
of people in positions of power, people who could influence an 
award of a contract or add to the capital outlay budget so their 
work would continue. 

Perhaps the most revealing thing in the Commission's hear- 
ings, private and public, was that witnesses who were part of 
this way of life still could not bring themselves to use the 
word "bribe" or "payoff." Constantly, euphemisms such as "con- 
tribution" or one's "commitment" to an agreement were the words 
chosen. Only when a Commissioner would bluntly ask, you 
mean a bribe, a payoff, don't you?, would there be reluctant as- 
sent. 

But to understand is not to forgive all. Bribes were given. 
Extortion was done. The public trust was betrayed. Among those 
who had money and the influence to strike the bargain, the state 
was for sale. 
POLITICAL INFLUENCE IN DOING BUSINESS WITH THE STATE 

Beyond direct bribery and outright extortion, beyond illegal 
campaign contributions and crooked generation of cash by corpora- 
tions, there is the close link between money and contracts through 
"legal" campaign contributions. The legality is purely technical. 
The way money is raised to run political campaigns is a mixture, 
depending on which side of the contribution you stand, of genteel 
extortion or discreet bribery. The practices are the same whether 
one is a Republican or a Democrat. 

One fund-raiser, who rationalized the process with great 
skill and effectiveness, described for the Commission with some 



25 

pride his method. A list is made of those who do business with 
the state: architects for design services, contractors for con- 
struction, engineers for consulting services, lawyers who may 
wish to be considered for judicial appointment. One can take 
a walk through the Yellow Pages to make up the list. An indi- 
vidual receives a call that the Governor would like to meet him. 
The innocent feels a flush of pride; the practiced feel for their 
pocket-book. The appointment is at a suite of three rooms in 
a Boston hotel. The outer room is a large waiting-room where one 
discovers one's peers and fellow-practitioners in uncomfortable 
numbers; in the second room sits the Governor, usually making 
up time over soup and a sandwich; the audience lasts no more than 
two or three minutes. In the third room is the fund-raiser who, 
with records at hand, reminds the individual of work done in the 
past, of profits received on state work, and suggests the time 
has come to help the Governor and the party by a maximum contri- 
bution. In this particular scenario, one cannot even apologize 
for a shortage of money, a cash-flow problem, as businessmen put it, 
because there is also in the room a stack of sixty- or ninety- 
day bank loan forms ready for a signature if things are tight or 
if you have forgotten your checkbook. 

What is not said is what is important. No one is so bald 
as to suggest if you do not contribute you will not do business 
with the state in the future: that would constitute extortion. 
No donor is so rude as to extract a promise for state work in 
the future: that would be bribery. Instead, there is the tacit 
understanding between public servants and private professionals 



26 

that this is how business is done in Massachusetts. A tough 
lawyer might argue that a certain state of mind exists which 
implies felonious conduct, but one doubts there are prosecu- 
tors who would want to argue the case in Massachusetts. 

The Governor who played his part in this little scene later 
justified the process in public testimony before the Commission 
by characterizing those who made large contributions to his elec- 
tion as public-spirited citizens who made politics possible! 
That was a Democratic Governor. The chief fund-raiser of the 
Republican party told one successful and later notorious archi- 
tect, "Your involvement in obtaining additional work from this 
administration will be directly in relation to the amount of 
money you can contribute and the amount of money you raise for 
fund-raising activities whenever I request it of you." 

Under another administration, a more subtle, less blatant 
relationship existed between campaign contributions and the 
award of contracts because of the existence of the Designer 
Selection Board which, as a professional body, recommended three 
architects to the Secretary of Administration and Finance. The 
Designer Selection Board was, unknowingly, easily manipulated. 
Once the list of three went forward, it was checked by the pa- 
tronage officer and the chief fund-raiser against lists of con- 
tributors, "friends" of the Administration. Anyone who had not 
contributed was assigned for solicitation. Then, the letter from 
the Designer Selection Board was walked by a high member of the 
Administration who, with a check or a dot, would indicate who 
was to receive the contract before the letter was delivered, fi- 



27 



nally, to the Secretary of Administration and Finance who had 
the statutory responsibility to make the selection. 

With splended irony, a member of the Commission's staff 
wrote that "a process based on political contributions and bri- 
bery is none the less a process, and it apparently served the 
Commonwealth for over a decade, if not considerably longer." 
The process degrades both the public official and the contribu- 
tor. The test becomes whether one pays, not whether one can 
do the best job. Over time, political influence, not profes- 
sional performance, comes to be taken for granted as the criterion 
for doing state work. The insidious effect, finally, is to lose 
sight of standards altogether and to accept shoddy performance 
because that is the way business is done in Massachusetts. 
SHODDY WORK AND DEBASED STANDARDS 

There was a moment during the life of the Special Commission 
when, in his office, the Speaker of the House, Mr. Thomas W. Mc- 
Gee, said, with angry puzzlement, to the Chairman of the Special 
Commission, "Let's allow the guy got the contract because of fa- 
voritism. Let's even allow the guy got the contract because he 
paid a bribe to get it. But he did get the contract! Why can't 
he build a building which stands up, a building which works?" 

One answer to the Speaker's cross question is that when 
businessmen, in this instance architects and contractors, believe 
that to do business with the state means they must buy a contract 
through bribes or payoffs, or even generous campaign contribu- 
tions on demand, the better of them will refuse to enter the 
system and will not do business with the state. The widespread 



28 

perception that the system is corrupt will, like Gresham 1 Law, 
drive the good players out of the game. A related answer is that 
those who pay tribute, whether through payoffs or required con- 
tributions, will cynically make their money back many times over 
by inferior work. To the degree the system is corrupt, to the 
degree political preference is the major avenue of access to the 
system, then to that degree professional standards of performance 
will decline and the motive of plunder take their place. 

Of all the costs of corruption, the erosion of standards of 
performance and an easy tolerance of the shoddy and the meretri- 
cious are, literally as well as figuratively, the most costly. 
There are two ways to show their presence and their effect: one 
is by anecdote, the other, by statistics. 

The anecdote concerns a former Secretary of Administration 
and Finance, charged with the selection of design firms from a 
list sent forward to him by, at that time, the Bureau of Build- 
ing Construction. The list, though, first had to be cleared 
with the Administration's and the Governor's chief fund-raiser. 
Presumably, all the firms listed were qualified to do the job, 
but if a "friend" of the Administration who was interested in 
the contract was not on the list, it would be sent back with a 
question whether that particular firm was not also qualified. 
When the list was finally determined, the chief patronage of- 
ficer would indicate which firm should receive the award of con- 
tract. As the Secretary of Administration and Finance testified, 
speaking directly to the Chairman of the Special Commission, "If 
I can . . . use the term which was in one of your presentations 



29 

to the legislature which I thought fit our situation precisely, 
you said simple favoritism, and I think that is what we tried 
to do. " 

Then, under questioning by a member of the Commission, a 
professional architect, who asked if it were not presumptuous 
to select architects for buildings in which people live and work 
as "bonuses for a political contribution," the Secretary respond- 
ed, "Well. . . most of the state work can be designed by a compe- 
tent but not outstanding designer. . . What you want is somebody 
who is competent to do the job and you just don't have time to 
search all over the Commonwealth to get the best you can." 

The particular Secretary of Administration and Finance was, 
as the saying goes, an honorable man. But it is not just that he 
could rationalize the award of contracts to political contributors 
on the grounds that he was choosing among qualified firms, but 
more tellingly he did not think excellence should prevail in 
public work anyway. Ordinary competence is all that state work 
requires . 

What the Commission learned was that one major consequence 
of corruption and political favoritism was an insidious erosion 
of standards and the acceptance of work in the public sector which 
would not be tolerated in the private sector, and should not be 
tolerated in public buildings. The miserable record of public 
construction in the Commonwealth of Massachusetts is a measure 
of contempt for the public realm and a failure to remember the 
root meaning of the "Commonwealth, " the shared common life of 
all citizens of the state which should be ruled by the highest 



30 

standards, and symbolized, especially in its architecture, by 
excellence . 

Cold statistics tell the same story. Since January 1, 1968, 
the Commonwealth through its several agencies appropriated more 
than seventeen billion dollars, including debt service, for con- 
struction projects, an enormous sum which does not include money 
spent by cities and towns. The Commission did a study under the 
direction of a professor of architecture from the Harvard School 
of Design of public buildings in Massachusetts. The results 
stagger belief. In the sample of buildings which we examined, 
seventy-six percent have significant defects, that is, "a struc- 
tural flaw that threatens the safety of building and results 
from incompetent design or inferior construction." Major con- 
struction projects under the supervision of the Bureau of Build- 
ings Construction show a failure rate of 72%, that is, have areas 
which are unusable because of errors in design. Since 1968, over 
a billion dollars have been wasted because of unnecessary delays 
in design and construction, and fifty million dollars have been 
spent on plans and designs for buildings which were never built. 
The estimated cost to the Commonwealth to repair present defects 
in all public buildings is more than two billion dollars . 

Beneath the numbers and behind the anecdotes, though, are 
human beings, the people whose daily lives are affected: students 
in libraries and dormitories and on playing fields, old people 
in homes for the elderly, office workers, and many more, let alone 
all citizens who through their taxes have paid for shoddy and in- 
ferior work. 



31 



THE "SYSTEM" OF ADMINISTRATION 

The management of the state's important business is so pri- 
mitive that one uses the word "system" only in the loosest sense 
of the word. With a professional and persistent staff, the Spe- 
cial Commission at the end of its work is not yet confident it 
has identified all the construction contracts the state has 
executed through its myriad agencies. The Chairman of the Spe- 
cial Commission, at a hearing before the joint House and Senate 
Committee on State Administration, challenged that Committee to 
find out such elementary information as how many buildings the 
state owned or leased. 

The essential information for effective administration is 
simply not there in the Commonwealth of Massachusetts. When the 
Commission began its- work, it went naturally to the Comptroller's 
office since he pays all invoices for the procurement of goods 
and services on the assumption it could, through that office's 
files, discover all contracts. Not so. The Comptroller's of- 
fice had many building contracts, but not all. More importantly, 
the historical record on each contract, that is, change orders, 
further appropriations, disbursements against the contract, were 
kept on separate cards in pencil by two diligent women who were 
proud of their files. 

From that moment, the Commission had an inkling of the stag- 
gering task it had in hand. Ultimately, the Commission had to 
reconstruct the universe it was charged to investigate. The Com- 
mission had to assemble from a wide variety of sources the data 



32 



on more than 1,400 building contracts so that it could bring 
some rational criteria to bear upon an examination of them. One 
of the heartening aspects of the Commission's v;ork was the gen- 
erous and ready assistance it had, pro bono , from the Massachu- 
setts Institute of Technology and Southeastern Massachusetts 
University, from Digital Corporation and An Wang Laboratories 
for computer programming, terminals, and word-processing equip- 
ment. Without their splendid help, the Commission could never 
have done justice to its mandate. 

Further, the Special Commission found no system for estab- 
lishing priorities among competing claims for billions of tax 
dollars for construction projects, no analysis of needs, no de- 
velopment of plans and programs to allow for cost and time con- 
trols over a particular project, no presentation of information 
which would allow the Governor a comprehensive view of the needs 
for capital spending or a member of the legislature to vote intelli- 
gently on a capital outlay budget. Small wonder that results 
have been what they have. 

An essential need in the Commonwealth of Massachusetts 
is a management information system which will establish at least 
the minimal conditions for effective administration. This has 
nothing to do with corruption, although it is true that the sys- 
tem is so diffuse and incomprehensible that it allows for poli- 
tical manipulation and, to that degree, tolerates corruption. 
Whether there is a cause and effect relationship can only be a mat- 
ter of surmise. 



33 



II 



On the basis of what it has learned, the Commission has 
made major proposals for legislative change to improve the pos- 
sibility of effective administration and to enhance the possi- 
bility of honest government. Much of that legislation has been 
enacted. It can be further improved and the Commission has of- 
fered amendments to do so. Other legislative recommendations by 
the Commission still await action. Broadly the bills which the 
Commission has drafted are aimed at the four areas just described: 
corruption, political influence, shoddy work, and poor administration 

To draft legislation is an art, a difficult art, and the 
technical language of a statute does not make for the liveliest 
prose and the most inspired reading. So, it may be well to des- 
cribe the general principles of the Commission's legislative in- 
tentions and leave the precise particulars to those who wish to 
pursue them through the pages of the Final Report and the General 
Laws of the Commonwealth. The Commission's legislation falls 
into four general areas: the management of the process of public 
construction; the prevention and detection of fraud, waste, and 
abuse through an Inspector General's Office; the reform of poli- 
tical campaigns and the provision of public financing for elec- 
tions; the creation of strong criminal and civil penalties 
against commercial bribery and false record-keeping. 

In the management of public construction, the intention of 
the Commission is to establish a system which is understandable 
and, more importantly, a system where responsibility is visible 



34 



and clearly located. From the outset, there must be a "program" 
for a building project, that is, a definition of need, the popu- 
lation to be served, and an assessment of the time and cost of 
construction. With thoughtful planning, a particular project 
can be properly placed among the priorities for capital spend- 
ing so the legislature may know what it is approving and whether 
the appropriation is adequate. There must be supervision from 
beginning to end, from preliminary development of a program to 
evaluation after the fact. Designers must be chosen on the ba- 
sis of their professional qualifications and reasons must be 
given why a particular designer is selected. Contractors must 
be qualified and their work evaluated. 

The Commission was successful in enacting a complete re- 
organization of the system of managing public construction in 
the Commonwealth of Massachusetts, save in one major area, the 
provision for filed sub-bids in construction. 

Put as simply as possible, the filed sub-bid law works as 
follows. When a building project is advertised, the construc- 
tion work is divided into categories reserved for different sub- 
contractors (masonry, electrical, plumbing, roofing, etc.). The 
law in Massachusetts creates seventeen categories of building 
work. The designated categories of work are bid first by the 
sub-contractors. A week later, the general contractor who, as 
the name implies, is to have general responsibility for the pro- 
ject, submits his bid, selecting his sub-contractors from those 
who have previously "filed sub-bids" on the work. The general 
contractor is not bound, by law, to pick the sub-contractor with 



35 

the lowest bid, but to win the contract himself the general con- 
tractor must be low bidder. Prudence or common sense will cause 
the general contractor to take the sub-contractor whose bid is 
lowest; if he does not, he must make up the difference somewhere 
else to insure that his own bid is the lowest bid. 

The consequence is double. First, the general contractor 
has no power to put together a construction team which, from his 
own experience and judgment, he wants to have. Quite the contrary, 
he must select the lowest filed sub-bids without consideration of 
quality and performance if he is to be low bidder himself. Second, 
responsibility for performance on the job becomes diffuse to the 
point of vanishing. How can the state hold the general contractor 
responsible when it has restricted, by legislation, his choice of 

I 

means and techniques? How can the state judge whether a general 
contractor is qualified to do a job and, at the same time, deny 
the general contractor the power to select his own team? 

Further, the filed sub-bid system and the low-bid require- 
ment for the general contractor combine to maximize the proba- 
bility that construction work will be poor. The contracts which 
were bought outright, or awarded as rewards for political contri- 
butions, were design contracts. The Commonwealth has an open 
competitive bidding system for the award of construction contracts . 
That seems eminently fair. But, unless the state has a way to 
disqualify general contractors because of previous bad performance, 
unless it is possible for the general contractor to have real and 
not nominal power of supervision, and unless responsibility for 
the work is clearly located, then shoddy work will continue. 
Price will be the sole criterion for selection of subcontractors 



36 

and general contractors, and they will tend to make their profit 
not on stated price but by shading specifications, substituting 
inferior material, or by simply coming to believe that public 
construction is not worth doing well. 

Massachusetts is the only state which has the filed sub-bid 
system. Connecticut has something close to it. But in no one of 
the other forty -eight states and the Federal Government, and no- 
where in the private sector, will one find the filed sub-bid 
system. But like the mother watching the parade where her son 
is out of step, maybe everybody else is wrong and Massachusetts 
is smart enough to employ the best system. The test of that, of 
course, would be Massachusetts 1 splendid record in public con- 
struction. Other forces are at work, to be sure, but the Com- 
mission unanimously and deeply believes the filed sub-bid system 
is the single greatest obstacle to the quality and the effective 
management of public construction in Massachusetts . 

The Special Commission believes the state should get out 
of the business of regulating the relations between the general 
contractor and sub-contractors. As the Commission comes to an 
end, once again we ask the legislature to abolish filed sub-bids. 

To prevent and detect fraud, waste, and abuse in the pro- 
curement of goods and services by the Commonwealth of Massachu- 
setts, the Commission proposed and the legislature created last 
June the Office of the Inspector General. The scope of the In- 
spector General's power was narrowed by the legislature and, in 
the Commission's judgment, an unwieldy supervisory council was 
created to oversee the Inspector General's work. But now, six 
months later, the Special Commission is more concerned with 



3? 

the inability of the political system to recruit and appoint a 
person of integrity and independence to fill that important post. 

As a measure of the depth of its concern about the profes- 
sional stature of the first incumbent, and its frustration at 
not being able to make an effective transition between the Com- 
mission and the new Office of Inspector General, the Commission 
is filing with its Final Report a bill to change the power of ap- 
pointment. As the bill stands, three constitutional officers 
(the Governor, the Attorney General and the State Auditor) must 
unanimously agree on the person to be appointed. For whatever 
reason, they have been unable to agree and to act. The Commis- 
sion proposes that the selection be taken out of the political 
process and that a majority of the Deans of the several law 
schools in the Commonwealth of Massachusetts recommend to the 
Governor for his appointment the person to fill the Office of 
Inspector General. 

The basic concept behind the Office of Inspector General is 
that any institution, a corporation, a university, let alone the 
institution of government, must build into itself a mechanism 
for self-criticism and self -correction. Given the nature of the 
institution, there are many different ways to do that, of course. 
To prevent and detect (and the emphasis falls as much upon pre- 
vention as detection) fraud and waste in the procurement of the 
many millions of dollars of goods and services by the Commonwealth, 
the Commission designed the Office of Inspector General to be a 
neutral, impartial and independent office to fulfill that critical 
function. 

The legislative intention behind the Office of Inspector 



38 

General is good, but it will be the independence and the profes- 
sional competence of the first incumbent who will set the tone, 
establish the practices and traditions of the Office and create 
the precedents which will influence successive Inspectors General. 
Ideally, the Office of Inspector General could create a future 
in the political life of Massachusetts where there would never 
again be the need for a Special Commission to investigate cor- 
ruption and maladministration. That was the great hope of the 
Special Commission: to negate the very basis of its own existence. 

The bill for campaign reform and the public financing of 
elections was the one major piece of the Commission's legislative 
package which was not acted upon by the legislature. The Commis- 
sion continues to urge its enactment by the legislature because 
the Commission continues to believe the present method of finan- 
cing political campaigns is one of the major sources of corrup- 
tion in the political life of the Commonwealth and the major source 
for improper political influence. Wherever power and money come 
together, there will be the possibility of corruption, but if 
citizens who care about the quality of political life would 
accept the need for broad-based public financing of elections, 
that would go far in doing away with the venality of politics as 
it is currently practiced. If one can give to the local communi- 
ty chest, one can surely designate two dollars each year on one's 
state income tax form to create a system which frees public ser- 
vants from their dependence on contributors who want something 
in return and which frees public servants to serve the public . 

Further, the Office of Campaign and Political Finance has 
been passive and ineffective. The Special Commission proposes 



39 

a reorganization of that office with an executive director and 
legal counsel with an eye toward making it a positive and aggres- 
sive force in auditing the receipt and expenditure of funds in 
political campaigns, and imposing penalties and sanctions on those 
who do not conform to fair campaign practices. 

The unholy alliance between private money and public power 
is the constant theme all through the Special Commission's in- 
vestigative work. The only way to break it is to break it. 
Public financing will not usher in the millenium, but it will 
change the present rules of the game and encourage greater in- 
dependence on the part of elected officials and will induce 
others to enter politics who find the present practices of rais- 
ing money so personally demeaning. 

Finally, the Special Commission learned in its work there 
are curious lapses and omissions in the laws of the Commonwealth 
of Massachusetts concerning bribery and extortion and false re- 
cord-keeping. As the Commission's investigators encountered 
false statements in applications, false business records, pat- 
terns of cash generation, and instances of outright extortion 
of one business firm by another, they also discovered that many 
of these nefarious activities are not specifically prohibited by 
law in Massachusetts, although all are by federal statute. In 
an important bill which received little notice and which passed 
with hardly a comment, the Special Commission corrected the le- 
gal situation. It may be a small comment on the past that such 
things seem not to have been of pressing concern in Massachusetts. 



40 
III 



What of the future? What hopes may one have that politi- 
cal life in Massachusetts will improve? 

It is an ancient tradition in American political life that 
when one discovers a wrong, one passes a law to prevent it. The 
statute book gets thicker and thicker but public morality seems 
not to change in equal proportion. The Resolve which created 
the Special Commission gave it two mandates: first, to inves- 
tigate corruption and maladministration in the award of contracts 
for state and county buildings; second, to make recommendations, 
legislative and administrative, to improve the system by which 
the state conducts its business. The two mandates are related. 
Investigation into the past provided better understanding of the 
system in order to suggest ways to improve performance in the 
future . 

From the outset, the Commissioners and their Staff thought 
that legislative proposals were the more important part of their 
work, even though the public was more interested in stories of 
particular acts of wrong-doing or the dramatic illustration of 
bad buildings. The Commission thought so because it thought 
that certain institutional arrangements would favor one kind 
of conduct over another. That is to say, the Commission does 
not believe that corruption is a simple matter of human nature, 
that good people will make bad institutions work, or that bad 
people will subvert the best institutions. Rather, if one is 
to make government effective and honest, one must recognize a 



41 

dynamic interaction between those in government and the insti- 
tutional setting in which they act. Politics is not a world 
of good guys and bad guys, a Manichean world of black and white, 
but a complex process of ordinary people, by and large, trying 
to do their work under circumstances which inevitably affect 
how they do their work. One must work at both dimensions: get 
good people to become active in politics and make public life 
an estimable and honorable calling; and, at the same time, de- 
sign the institutional arrangements of government to attract 
good people and, more, to make it possible that they can do 
their work well. 

The most dispiriting question which every Commissioner at 
one time or another confronted was the quizzical remark, "But 
do you think your work will really make any difference?" The 
skepticism implicit in that query may be seen in the nature of 
the Commission itself and in public reaction to its work. 

When allegations and rumors about the now notorious MBM 
contract for the construction of the Boston campus of the 
University of Massachusetts began to surface, and especially after 
the conviction of two state senators for extortion, tremendous pub- 
lic pressure arose for a full and complete investigation of that 
contract, particularly, and state contracts generally. With unani- 
mity in the House and only one dissenting vote in the Senate, 
the legislature created the Special Commission. The Governor 
was mandated to select the President of a private college or uni- 
versity, or the Dean of a Law School; other constitutional offi- 
cers were mandated to select other members of the Commission upon 



42 

the recommendation of appropriate professional organizations 
(for example, the Massachusetts Bar Association), or "lay persons" 
who had never served in the General Court. The only "political" 
member was to be the Attorney General. 

The constitution of the Commission, i.e ., the mode of se- 
lection of its members, is a clear expression of a distrust of 
politics, a lack of trust in the capacity of government itself 
to be self-critical and self-corrective. So one turns to inde- 
pendent, professional citizens in order to serve the public 
good, pro bono publico , as the antique phrase has it. The phrase 
has a freer translation, a more popular meaning: to serve pro 
bono is also to serve without pay. Skepticism about human nature 
runs so deep that it includes the motivations of private indi- 
viduals as well as elected officials. 

To put it another way, it was thought that an investigation 
into fraud and corruption, into white collar crime and malfea- 
sance in public office, would have no credibility with the public 
unless the body doing the investigation was insulated from the 
slightest possiblity of political motive or personal gain. Fur- 
ther, if the members of the Commission were not to have a per- 
sonal interest, either political or economic, they were also, 
as professionals, to exercise their professional and disinterested 
intelligence in their common pursuit of the public interest, the 
general good. 

If one stands back and considers the state government, one 
will quickly recognize that all the powers necessary for an in- 



43 



vestigation were potentially at hand: a special investigative 
unit headed by a Captain of the State Police attached to the 
Governor's Office, the State Auditor, the Attorney General, even 
the Post Audit Committee of the Legislature which had already 
made an estimable beginning in the investigation of the MBM 
contract before the Special Commission came into being. But 
these powers were brushed aside because they were established 
political powers. It was the health of politics itself which 
was at issue in the intense concern that the public trust had 
been betrayed. The mood which characterized the establishment 
of the Special Commission was, to put it shortly, cynical. 

The mood persists. In June 198 0, after public hearings 
by the Commission and after the enactment of major legislation, 
a private polling organization sampled public opinion about the 
Commission. 54% knew nothing or "not very much" about the Com- 
mission's work. Of the 46% who knew a "fair amount" (31%) or 
a "great deal" (15%) about the Commission, 71% thought the Com- 
mission had done a good job and that the time and money spent 
by the Commonwealth was "necessary and useful." Yet, among the 
very same people who did know the work of the Commission, only 
one in three thought its work would correct abuses. Almost 60% 
thought things would go on as they always have and there would 
be no improvement whatsoever in the future . 

The contradiction, between the opinion of 71% who knew 
about the Commission and thought its work necessary and useful, 
and the 60% of the same people who thought it would make no differ- 
ence, is one indication of the deep frustration felt by citizens who 



44 



attend to public issues and who care about public life. What 
can be done about it? 

It may come as a surprise to some, since it comes from the 
Special Commission, but one answer to the question is to say 
that Special Commissions are not a good way to conduct public 
life. The existence of a Special Commission symbolizes a per- 
vasive attitude that government does not serve the public good, 
so a Commission is formed of people outside of government to 
act as a force against established ways of doing things. 

There are other problems, to be sure, with the creation 
of Special Commissions. Who can afford to serve on them? To 
satisfy the aroused expectations of the public and carry the 
heavy responsibility laid upon them? Clearly, only indepen- 
dent professionals with a high degree of control over their 
own lives and calendars can consider such service. Further, 
such professionals represent a narrow and select sample of the 
general population and run the risk of being insulated, by vir- 
tue of their own social and economic class, from the very social 
and economic pressures which it is the business of politics to 
mediate . 

If public life relies upon spasmodic outrage to create 
Special Commissions to correct the ills of public life, then 
public life is in dire shape, indeed. That is why the Special 
Commission created the Office of Inspector General, to build 
the capacity for self-correction into government itself. But 
the fate of that piece of legislation raises deep disquiet 
about the future . 



45 



It is not just that the political procedure has not been 
able to select and appoint an Inspector General, as has already 
been described, because of a conflict among the triumvirate who 
must make the appointment. There were two specific and import- 
ant details which were changed without discussion and without 
debate in the bill for Inspector General. The first had been 
hotly contested by the Special Commission with the Leadership 
in the House, the power of the Inspector General to make refer- 
rals to any prosecutorial body, including the U.S. Attorney. 
The Commission had its way and the power to refer cases to the 
U.S. Attorney was included. At some point in the final passage 
of the bill, someone- deleted it. Without debate, without formal 
amendment, someone secretly took a pen and crossed it out. As 
the bill now stands, the Inspector General is in the preposterous 
position of not being able to refer a case to a federal prose- 
cutor when he knows a federal law has been violated. It happens 
to be a crime not to refer evidence of a federal crime to feder- 
al authorities. The Great and General Court of the Commonwealth 
of Massachusetts has created a high office in state government 
which forbids the incumbent to do that. The other change made 
by the legislature, again without discussion, is blatantly self- 
protective: the subpoena power of the Inspector General does not 
run to the records of a legislative committee. Both changes were 
made surreptitiously. By whom, no one knows. 

Members of the Commission have often said, in an attempt 
at humor, that if one hangs around Beacon Hill one soon becomes 
paranoiac. But the humor wears thin. One seriously begins to 



46 



question whether there is the will to make politics in this state 
better. The Commission would deduce other examples from its ex- 
perience: the long struggle to get adequate funding, let alone 
office space, to do its work; the curious attempt to add another 
member by the Governor's appointment well into the Commission's 
work; the cloud of confusion and half -understood changes in the 
Commission's bills during the exhausting final hours of the un- 
seemly rush to prorogation. 

What the Commission encountered in its work was overt sup- 
port and covert resistance. Legislation for reform was finally 
passed, to be sure, but only under strong pressure and with grudg- 
ing assent. The will of the people finds its voice in the words 
and actions of its representatives. That, as the most elemen- 
tary textbook has it, is what politics is all about. Those who 
hold power are the ones who have the power to change the way busi- 
ness is done in Massachusetts. 

One may bemoan the apathy, or decry the cynicism, of the 
general public. But that, curiously, happens to be the posture 
of both the sentimental, disenchanted reformer and the corrupt, 
irresponsible politician: the public gets what it deserves. But 
if there is a lack of will to make politics better in this state, 
let us look where the responsibility starts, to our "leaders," 
the men and women who have been elected to conduct our public 
life. 

For every member of the Special Commission and its Staff, 
the experience has been intense, educational and immensely re- 
warding in ways that money, the usual coin of the political 
realm, could never measure. The Commission would like to end 



47 



with nothing but positive sentiments and strong words of en- 
couragement to the public. It can not. The Commission ends 
with words of seasoned skepticism. One needs to be precise: 
skepticism, not cynicism. Skepticism means that, whatever one's 
doubts, one must act as if one can make a difference. One never 
knows where the limits are until one presses against them to 
discover whether they are, indeed, limits or simply self -created 
excuses not to act, not to try. 

It is in that spirit the Special Commission has acted. We 
have tried. We held public hearings on our investigations to 
show the average citizen that, yes, it is possible to ferret 
out the truth and to discover what was done. We used the extra- 
ordinary powers which the legislature bestowed upon us profes- 
sionally and fairly and responsibly. We have proposed and gained 
the enactment of legislation which could improve the conduct of 
public business in the Commonwealth of Massachusetts. 

We end, though, as we began. The major lesson to be learned 
from the experience of the Commission is that what is- most 
needed in the Commonwealth of Massachusetts is confidence that we 
have the intelligence and the will to create good government. To 
say so, of course, is to sound like that scene in Henry IV when 
Hotspur boasts, "I can summon monsters from the deep." To which 
Prince Hal replies, "So can I. The question is, will they come." 

To say we need confidence in government is not to create 
confidence in government. That will depend on many things.- It 
will depend on the press and television to illuminate and to 
criticize the doings of government. It will depend on engaged 



48 



citizens to become informed and to demand good government. But 
it will depend most on those elected and appointed officials 
whose obligation is to govern well. They must have the will to 
act. All the Commissions and all the legislation in the world 
can not create that indispensable and necessary condition: the 
will and the desire of people in government to serve the people. 

The mandate of the Special Commission was to look at 
just one aspect of public life, the award of contracts for the 
construction of state and county buildings. It took us more 
than two years to do our work. It will take more than ten years 
to do the rest, to create a climate of opinion where there is 
public trust because political leaders manifest the will to 
serve the public good. 

That is why, with all its work, the Commission is only a 
beginning . 



The Commonwealth of Massachusetts 



State Li ry c ssachusetts 
Stale H . Boston 




Final Report 

To The General Court 

Of The Special Commission 

Concerning State And County Buildings 



December 31, 1980 



Created by 

Chapter 5 of the Resolves of 1978 

as amended by Chapter 1 1 of the Resolves of 1979 

and by Chapter 257 of the Acts of 1980. 



I 



VOLUME 2 






State Library of Massachusetts 
State House, Boston 



VOLUME II 



REPORT ON THE INVESTIGATION OF MBM AND RELATED ENTITIES 



TABLE OF CONTENTS 







9\ 



CHAPTER I 



Why the Commission Investigated Matters Relating to MBM 



CHAPTER II 



Corporate Overview of MBM 

A. The Formation and Early History of MBM 

B. The Unsuccessful Attempt in 1969 to "Go Public" 

C. The Acquisition in 1971 of MCM 

D. The Combining in 1972-7 3 with IMS 

E. The Separation in 1975 from IMS 

F. The Termination of MBM in 1978-79 



CHAPTER III 



MBM's Activities in Massachusetts prior to 1969 

A. Activities during the Peabody Administration (1963-64) 

B. Activities during the Volpe Administration (1965-68) 



5 

5 

6 

8 

12 

15 

15 

17 
17 
21 



CHAPTER IV 



MBM's Procurement of the UMass/Boston Project Management 
Contract 

A. Introduction 

B. MBM's Decision in Late 1968 or Early 1969 to Make a Major 
Effort to Win Large Public Contracts in Massachusetts 

C. MBM's Attempts to Win a Contract to Provide a Management 
Information System for the BBC 

D. The Commonwealth's Decision to Use an Outside Project 
Management Firm on the UMass/Boston Project 

E. MBM's Initial Awareness of the Potential UMass/Boston 
Project Management Contract 

F. Issuance of the Formal Request for Proposals by the 
Designer Selection Board 

G. MBM's Decision to Have Former Governor Endicott Peabody 
Assist in MBM's Efforts to Obtain the UMass/Boston Contract 

H. The Fee Arrangement Between MBM and the Peabody Firm 

I. The October 1, 1969 Meeting of Peabody and MBM's Officers 
Regarding the UMass/Boston Contract 

J. The Formal Procedure by Which the UMass/Boston Project 
Management Contract Was to Be Awarded 



26 

26 
27 

29 

34 

42 

44 

47 

51 
52 

53 



- 11 - 

K. Peabody's Early Contacts with UMass Officials 56 

L. Peabody's Early Contacts with BBC Officials 58 

M. Activities by MBM Officials during October and 60 

November 1969 

N. The Short-lived Seelye-McKee Joint Venture Proposal 62 

0. Interviews of Five Semi-Finalists by the Designer 6 3 

Selection Board 

P. Endicott Peabody's Discovery of, and Response to, 6 5 

a Conflict of Interest 

Q. The DSB's Selection of Three Finalists on 71 

December 17, 1969 

R. The Alleged Meeting of Endicott Peabody and Deputy 7 3 

A&F Commissioner Albert H. Zabriskie on December 18 or 19, 
1969 

S. The Alleged Meeting of MBM Vice President Anthony Mansueto 76 

and MBM Salesman Martin Heyman with A&F Commissioner 
Donald Dwight on December 19, 1969 

T. The MBM Christmas Party in New York on December 19, 1969 79 

U. The "Kick-off Meeting" for the UMass/Boston Project 81 

on Monday Morning, December 22, 19 6 9 

V. Donald Dwight' s Selection of MBM as the Winner of the 83 

UMass/Boston Project Management Contract 

W. Dwight ' s Selection of Haldeman & Goransson for One 85 

of the UMass/Boston Architectural Contracts 

X. Governor Francis W. Sargent's Knowledge or Lack of 89 

Knowledge of the Award of the UMass/Boston Project 
Management Contract 

Y. MBM Vice President Anthony E. Mansueto' s Testimony 90 

About the UMass/Boston Contract 

CHAPTER V Evidence Relating to Whether MBM Obtained the UMass/Boston 94 

Contract Through a Corrupt Agreement 

A. Introduction 94 

B. Evidence that Contracts Were Awarded by the Volpe and 94 
Sargent Administrations in Return for Prior Commitments by 

the Winning Firms to Make Illegal Cash Payments 

C. Evidence that MBM Officials Admitted to Others that MBM 98 
Made a Commitment to Pay Cash to Manzi in Connection with 

the UMass/Boston Contract, and that Manzi Repeatedly 
Complained that MBM Was Slow in Living up to Its Commitments 
on the UMass/Boston Contract 

1. Testimony of Frank R. Masiello, Jr. 98 

2. Testimony of William V. Masiello 101 

3. Testimony of Daniel J. Shields 101 



- Ill - 



4. Testimony of William F. Harding 

5. Testimony of Stanley Davis 

6 . Affidavit of Maurice Khoury 

Evidence that MBM Generated Tens of Thousands of Dollars 
in Cash for Payment to Politicians 

1. Cash Generation and Questionable Accounting 
Practices by MBM 

2. Alleged Cash Generation for MBM by Maurice Khoury 

Evidence That MBM Paid At Least $30,000 in Cash to Republican 
Fundraiser Albert Manzi After MBM Won the UMass/Boston Contract 



102 
102 

103 
103 

104 

110 
114 



CHAPTER VI 



1. The October 16, 1970 Payment to Fundraiser Albert Manzi 

2. The Alleged Payment to Manzi in Februarv 1972 

3. The May 18, 1972 Parker House Meeting and MBM's May 23, 
1972 Payment to William Masiello for Manzi 

F. Conclusion 

The Terms of MBM's UMass/Boston Contract , 
MBM's Anticipated Profit, and 
MBM's Performance on the Contract 

A. Terms of the Contract 

B. MBM's Anticipated Profit 

C. MBM's Performance 



114 
117 

119 

124 
126 

126 
130 
131 



CHAPTER VII 



Challenges to MBM's UMass/Boston Contract 

A. The Bill Filed by Rep. Thomas F. Fallon in 1970 

B. The Newspaper Articles in 1971 Criticizing MBM's 
UMass/Boston Contract 

C. The Investigation in 1971 by a Special Legislative Committee 
Chaired by Senator Joseph J.C. DiCarlo and Representative 
Ralph L. Sirianni, Jr. 

1. The Filing of an Order by DiCarlo, Sirianni, and 
Representative William F. Hogan Calling for an 
Investigation of MBM's UMass/Boston Contract 

2. The February 1971 Meeting at DiCarlo 's Home 

3. Changes in the Wording of the Order Calling for an 
Investigation of MBM's UMass/Boston Contract 

4. MBM's Discussions with Kelly about the 
DiCarlo-Sirianni -Hogan Legislation 

5. The Selection of Members for the Committee 

6. MBM's Purchase of Tickets for House Speaker 
Hartley's "3runch" 

7. The Investigation Conducted by the DiCarlo-Sirianni 
Committee 

8. The First Draft of the DiCarlo-Sirianni Committee 
Report 



135 
135 
140 

147 
147 

149 

152 

153 

157 
160 

162 

170 



_ IV _ 



9. The Intercession of Senator Ronald C. MacKenzie and 
the Changing of the DiCarlo-Sirianni Committee Report 

10. Payments Made by MBM to DiCarlo and MacKenzie 

11. DiCarlo 's Visit to MBM's New York Office 

The Investigation in 1972-73 by Auditor Joseph A. Davey 
of the Post Audit Bureau 



176 

188 
198 

202 



CHAPTER VIII 



D. 

E. 
F. 
G. 



The Investigation, Prosecution, Appeals, and 

Post-Trial Motions of Joseph DiCarlo and Ronald MacKenzie 

The Investigations of MBM in Philadelphia Which Led 
to the First Allegations About DiCarlo and MacKenzie 

The Forwarding of the DiCarlo-MacKenzie Allegations to 
the Boston Office of the Federal Bureau of Investigation 

The First Knowledge by DiCarlo and MacKenzie that They 
Were Being Investigated 

Events Leading to the DiCarlo-MacKenzie Indictments 

The DiCarlo-MacKenzie Trial 

Post-Trial Proceedings and Allegations 

Attempts to Induce MacKenzie Not to Implicate DiCarlo 



208 
208 
211 
213 

214 
216 
220 
228 



CHAPTER IX 



The Manzi-Masiello Trial in 1979 

A. Events Preceding the Manzi-Masiello Trial 

B. The Trial and Acquittals 

C. Masiello's Admission to the Commission that Masiello 
Committed Perjury at the Manzi-Masiello Trial; Masiello's 
Allegation that Manzi Also Committed Perjury at the 
Manzi-Masiello Trial; Related Allegations 



233 
233 
236 
240 



CHAPTER X 



Activities in Massachusetts of William F. Harding and 

Daniel J. Shields at Times When Thev Were Not Working for MBM 

Why the Commission Has Investigated the Activities in 
Massachusetts of Hardina and Shields at Times When 
Harding and Shields Were Not Working for MBM 

Activities of Harding and Shields in Massachusetts 
Prior to Joining MBM 

Efforts by Hardina and Shields to Win Public Contracts 
Through Essex County Commissioner Daniel J. Burke 

1. Initial Contacts Between Harding and Burke 

2. The MacKenzie-Tully Bill 

3. Burke's Agreement to Help Harding and Shields 
Obtain Essex County Contracts 

4. The Formation of PCM 

5. The BBC's Position Regarding Use of PCM by 
Essex County 



242 
242 

244 
249 

249 
251 
252 

254 
256 



APPENDICES 



- v - 



6. Essex County Contracts Awarded to PCM 260 

7. Payments to Burke by PCM Officials 262 

8. The Refusal by Essex County Treasurer 265 
Thomas F. Duffy to Pay PCM's Invoices 



CHAPTER XI Conclusion 



269 



A. The Fee Arrangement Between MBM and the ^eabody Firm A-l 

B. Evidence Bearing on MBM's Activities in Other States A-16 

C. MBM's Attempt to Win a Project Management Contract for the A-29 
UMass/Worcester Medical School 

D. MBM's Attempts to Win Contracts Regarding the Middlesex A-35 
County Courthouse 

E. MBM's Successful Efforts Regarding Its "Delay Claim" in 1972 A-40 

F. MBM's Fee for Work at the Worcester County Jail A-48 



REPORT CN THE INVESTIGATION OF MEM AND RELATED ENTITIES 

CHAPTER I 

WHY THE COMMISSION INVESTIGATED 

MATTERS RELATING TO MEM 

When the Legislature established the Commission in April of 1578, it invested 
the Commission with authority to investigate any or all contracts awarded since 
January 1, 1966 "related to the construction of state and county buildings." 
This broad grant of jurisdiction was enhanced by clarifying amendments enactec in 
July 1579 which explained (a) that the Commission could investigate certain 
types of contracts awarded before 1566 if they related tc construction contracts 
awarded after January 1, 1568 ana (b) that contracts awaroed by the "state" 
should be understood to include contracts awarded by "public instrumentalities 
established under general or special laws" of the Commonwealth. The Commission 
has estimated that these provisions gave the Commission a universe of at least 
four thousand (4,000) contracts worth a total of approximately four billion 
dollars ( $4 , COO , 000 , 000 ) that the Commission could investigate. 

The discretion given to the Commission in determining which of these 
contracts tc investigate was almost as broad. The Commission was permitted to 
decide for itself which contracts within its jurisdiction to investigate and 
which not to investigate -- with one exception. The Legislature mandated that 
the Commission investigate "the awarding, implementation anc the subseouent 
events concerning the contract between the firm of McKee-Berger-Mansueto , Inc. 
and the commonwealth relating to the management of construction of certain 
buildings on the Eoston campus of the University of Massachusetts." Not only 
was the Commission thus reauired to investigate the MEM-UMass/Boston contract, 
but it alsc was reauired to conduct hearings in public and to file a public final 



- Commonwealth of Massachusetts, Resolves, c. 5 (1978). 

2 Commonwealth of Massachusetts, Resolves, c. 11 (1579). 

3 See Special Commission Concerninc State and County Euildincs, Interim Peccrt 
tc the General Court (January 15, 1979). 

L This reguirement was contained in both Chapter 5 of the Resolves of 1976 and 
Chaoter 11 of the Resolves of 1979. 



report cf its investigation. 5 The Legislature singled out the MEM-UMass/Pcstcn 
contract because of serious allegations about that contract that had received 
intense publicity and had been the catalyst^ for the Legislature's decision to 
create the Commission: 

On February 25, 1577, after a four-week trial, two prominent 
state senators -- Senate Majority (Democratic) Leader Joseph 
J.C. DiCarlo and Republican Senator Ronald C. MacKenzie -- 
were found guilty by a federal jury of violating the Hobbs Act 
ano other feoeral statutes by virtue of accepting tens of 
thousands of dollars in cash from M8M in return for altering 
the report of a legislative investigation in 1971 into the 
MEM-UMass/Ecston contract. 7 DiCarlo and MacKenzie 
maintained their innocence through their unsuccessful 

c 

appeals and insisted, in a new trial motion, that their 
trial lawyers had not represented them adequately because the 
trial lawyers had failed to counter the Government's claim of 
"extortion" with evidence that MEM had voluntarily made 
thousands of dollars of similar cash payments to fundraisers 
for Governor Francis W. Sargent and to other public officials 
more prcminent than DiCarlo ano MacKenzie.^ 



Id . In circumstances where a need for grand-jury-type secrecy or other 
considerations made it appropriate, hearings could be held in private. 

£ See the History of the Commission, elsewhere in this Final Report. 

7 Judgment and Frobaticn/Commitment Order, United States v. DiCarlo, 

MacKenzie , Cr. 76-339-S; "DiCarlo, MacKenzie guilty on all counts," Eoston Globe, 

February 25, 1977 (p.m. ed.), at 1. 

lee e.g. "MacKenzie, DiCarlo appeal," Eoston Globe, August 24, 1977 (p.m. 



ed . ) , at 6. Robert L. Turner, "DiCarlo, MacKenzie may ask new trial," Eoston 
Globe, September 24, 1977; Lawrence Collins, "DiCarlo admits takino $11,500 from 
N.Y. firm," Eoston Globe, April 8, 1980, at 1. 

Defendants' Moticn for a New Trial, filed December 23, 1977, in United 
States v. DiCarlo, MacKenzie , Cr. Nos. 76-339-1-S, 76-339-2-S (D . Mass . ) . The 
motion also singled out a payment or contribution that MEM allegedly made to 
Senate President Kevin E. Harrington (made at a time when Harrington was Senate 
Majority Leader and was actively seeking to become Senate President). Although 
not specifically mentioned in the motion, there also was evidence that ^E^ had 
made illegal payments or contributions to the 1970 gubernatorial campaign of 
Boston Mayer Kevin H. White, and to Senate Ways & Means Committee Chairman James 
A. Kelly, Jr. The allegations regarding some of these payments or contributions 
are discussed in Appendix F, infra . 



Allegations were reported in the press in 1978 to the effect 
that former Governor Endicott Feabody, acting as a private 
attorney on behalf of MEM, caused the Joint Legislative 
Committee on Post Audit and Oversight to terminate prematurely 
an investiaation of the MBM-UMass/Eoston contract in 



157: 



10 



The Post Audit Committee set up a subcommittee 



chaired by Rep. Gerald M. Cohen to investigate the 
matter, ^ and it soon learned that the parent committee's 
chairman (Rep. Gerald Lombard) and staff director (William H. 
Finnecan) had taken it upon themselves in January 1978 to 
alter notes from 1973 Post Audit Committee meetings in which 
the MEM contract had been mentioned. z 

During the subseauent widely-publicized hearings of the Pest 
Audit Subcommittee in 1978, questions were raised about why a 
private project management firm was employed for the 
UMass/Eoston project and whether MEM used improper means to 
cbtain the contract. Former Lieutenant Governor Donald R. 
Dwight -- who had been the Commissioner of Administration 6 
Finance in 1969 who chose MEM for the UMass/Boston 
contract 1 -- testified to the Fost Audit Subcommittee that 
he may have selected MBM based upon a "dart-board theory." 1 



lu See e.g. Robert J. Rosenthal, article about the Post Audit Subcommittee 
investigation Boston Globe, February 3, 1978. 

11 "Sub-Committee Report on M.E.M." issued on August 14, 1978 by the Joint 
Legislative Committee on Post Audit and Oversight Subcommittee on the EEC Study 
("the Pest Audit Subcommittee"), at 1. The report of the Post Audit Subcommittee 
will be cited hereinafter as "P. A. Report." 

12 p. A. Report at 2, 96-101. 

13 See P. A. Report at 2-3, 12-33. 

iA Letter dated December 22, 1969 from (\&F Commissioner Donald P. Dwight to 
EEC Director Walter Poitrast announcing selection of MEM as project manager for 
the UMass/Eoston project. 

15 Testimony of Donald R. Dwiaht, P. A. 3/15/78 at 62. Note: In this report, 
"Sp. Comm." and "P. A." and "DiC" and "M/M" refer respectively to transcripts of 
testimony before the Special Commission Concerning State and County Buildings; 
the Joint Legislative Committee on Fost Audit and Oversight Subcommittee on the 
EEC Study ("the Fost Audit Subcommittee"); the federal court in United States v. 
DiCarlo, Mackenzie , Cr. 76-339-S (D. Mass. 1977); and the Superior Court in 
Commonwealth v. Masiello, Manzi , Nos. 019122-7, 018334 (Suffolk Cty. 1979). 



When the Commission was established, the Post Audit Subcommittee followed the 
legislature's mandate that the Subcommittee conclude its own investigation of MEM 
ano make the records of its proceedings available to the Commission. The 
Commission thereupon commenced its effort to fulfill its statutory mandate tc 
study anc report about the activities of MEM and related entities in 
Massachusetts . 



1£ Commonwealth of Massachusetts, Resolves, c.5 (1978) 



CHAFTER II 



CORPORATE OVERVIEW OF MEM 



The Format ion and 
Early History of MEM 

To understand certain significant aspects of the evidence relating to MEM, it 
is important to have a basic knowledge of major events in MEM's corporate history 
MEM was incorporated in February of 1955 in New York. 1 MEM's three principals 
-- President Gerald McKee, Jr., Vice President/Secretary Seymour Eeroer, and Vice 
Fresicent/Treasurer Anthony E. Mansueto 2 -- formed MEM upon leaving firms doing 
similar work, where they had previously met.-' Eerger headed up MEM's small 
technical staff, Mansueto was the major salesman, and McKee assisted in the sales 
effort while providing general direction for the new firm.' 1 MEM initially 
concentrated on construction cost estimating. 

One of MEM's first employees was Martin H. Heyman, an electrical 

estimator. Another early MEM employee was Jack S. Thcmas, who also joined y?y 

7 P 

during 1955. Ivan Soskel came to MEM in I960. Heyman and Soskel later 

became salesmen covering the Massachusetts area for MEM, and Thomas later became 

manager of MEM's Eoston office.'' 



J- MEM's certificate of incorporation was executed on February 16, 1955 and 
filed with the New York Department of State on February 18, 1555. 

2 Testimony of Anthony E. Mansueto, 2 M/M 2/13/79 at 33-36. 

3 Ld. Also , testimony of Gerald Mckee, Jr., 5 DiC 1/31/77 at 145-147. 
A Id. 

5 Testimony of Geralo McKee, Jr., Sp. Comm. 6/26/60 at 19-20. 

6 Testimony of Martin H. Heyman, 25 M/M 3/26/79 at 52-53. 

7 Testimony of Jack S. Thomas, 10 M/M 2/26/79 at 42. 

"McKee-Eerger-Mansueto , Inc.: New York Office - Personnel Listinc" dated 
February 1970. 

9 Testimony of Anthony E. Mansueto, P. A. 5/23/78 at 8-9; Heyman testimony, V/^ 
3/26/75 at 53. McKee testimony, Sp. Comm. 6/26/80 at 20. Testimony of Jack S. 
Thcmas, 11 CiC 2/8/77 at t. 



- 6 - 

MBM's contracts in 1959 and the 1960s were generally small estimating jobs 
for architects. c The size of such contracts typically was under $10,000. H 

In the early and mid-1960s, MEM explored business possibilities outside New 

York. z An office was openeo in Chicago which came, by the late 1960s, to 

generate most of MEM's sales anc profits. " MEM's efforts in Massachusetts 

were less successful. MEM aid obtain a number of small jobs but not enough 

tc justify opening a full-scale branch office. 

The Unsuccessful Attempt 
in 1969 tc "Go Public" 

Late in 1968 or early in 1969, MBM decided to embark upon a major expansion. 

MEM President McKee had visions of MEM as the leader in a relatively new field 

caileo "construction management" or "project management" in which MEM would 

provide comprehensive analytical and supervisory services to public agencies and 

private companies that planned to have buildings built or renovated. ^ 

Although this field was not invented by MEM, the use of the full package of 

services envisioned was not yet common, particularly by public agencies. 



1C "Construction Consultants Fire at One Target: Costs," Engineering 
News-Record , September A, 1969, at A. 

11 See id . at 6. 

1 2 Id. Also, McKee testimony, So. Ccmm. 6/26/80 at 20. 

12 Notes of 8/2/79 interview of former MEM Chicago manager James E. Elias by 
Special Commission staff, at 1-3. 

14 See charts entitled "Partial List of MEM Contracts in Massachusetts - 
Fublic & Frivate: 1964-1969" introduced as Exhibit 2A during McKee testimony, Sp 
Comm. 6/26/8C at 21. The Commission staff prepared these charts from MEM job 
cards and other MEM documents. 

15 Mansueto testimony, P. A. 5/23/78 at 9-10; see testimony of William V. 
Masiello, Sp. Comm. 6/24/eO at 4-5. 



16 



McKee testimony, P. A. 3/22/78 at 11-17 



1~ See discussion among Gerald McKee, Jr. and Commissioners Jchn William Ward, 
Walter J. McCarthy, and Lewis Weinstein, Sp. Comm. 6/26/80 at 26-30. See also 
McKee testimony, id. at 8-11. 



- 7 - 

Anticipating success in its new endeavors, MBM moved its offices to larger 
quarters at 2 Park Avenue in New York. I 8 MBM also engaged underwriters to 
float a public offering aimed at generating approximately $1 million in new 
equity capital . 

The prospectuses filed with the Securities and Exchange Commission explained 
that $350,000 of this new capital would be used to retire existing short-term 
debt. Another $175,000 would finance MBM's new office in Manhattan as well as 

on 

projected offices in three other cities. MEM's reported profits for 1968 
were $90, COO. 21 

The proposed public offering never came to be. Although MEM changed 
underwriters and incurred expenses approximating $150,000 in connection with the 
public offering attempts, MEM was unable to make its public offering. 
Critically in need of at least $500,000 to keep afloat, 23 MBM managed to obtain 
a $500,000 loan in early 1970. 2A 

It was during this period that MEM sought and obtained the UMass/Eoston 

o c 

contract. MEM was selected in December 1969 for the job, and the formal 



18 See Preliminary Prospectus dated March 28, 1969 filed by MEM with the 
United States Securities and Exchange Commission ("SEC"), at 5. 

15 See Preliminary Prospectuses dated March 28, 1969 and July 25, 1969, filed 
by MBM with SEC; Preliminary Prospectus dated November 12, 1969, not filed with 
SEC. 

20 mbm Preliminary Prospectus datea July 25, 1969, at 5. 

21 MEM Preliminary Prospectus dated March 28, 1969, at 6. 

22 See letter dated December 23, 1969 from Gerald McKee, Jr. to Martin Heyman, 
expressing regret at abandonment of public stock offering; minutes of March 16, 
1970 special meeting of MBM's board of directors, at 1-2; notes of 6/20/79 
interview of Laventhol & horwath auditor Arthur 0. Hirshberg by Special 
Commission staff, at 2. 

23 See preceding paragraph of text. The Commission has also been told that 

MBM was having problems meeting its tax bills. See notes of 7/2/79 interview cf 
former MEM bookkeeper Patricia Earilla by Special Commission staff, at 1-2; notes 
of 6/20/79 interview of former MEM comptroller Julius H. Beim by Special 
Commission staff, at 1. See also minutes of special meeting of MEM's board of 
directors, supra n. 22, at 2. 

2Zt Minutes of March 16, 1970 special meeting, supra note 22, at 2; minutes of 
August 12, 1970 annual meeting of MBM shareholders, at 3. 

25 Letter dated December 22, 1969 from A&F Commissioner Donald P. Dwight to 
BEC Director Walter Poitrast, announcinc appointment of MBM as project manager 
for Project U67-A #2A (UMass/Eoston). 



- 8 - 
contract was executed in April 1970. 26 MEM ultimately received approximately 
$5.5 million from the contract (and its extensions), 27 which made it more than 
ten times larger than MBM's previous largest contract. 28 Indeed, the 
UMass/Eoston contract was the second largest contract that MEM ever received 
curing the firm's 20-year existence. 

The Acquisition 
in 1971 of MCM 

Despite its success in obtaining the UMass/Boston contract, MBM's financial 

picture remained clouded and its desire for expansion continued. In an 

attempt to expand internationally 3i and "turn two negatives into a 

32 
positive," MEM in 1971 acquired another company experiencing financial 

difficuties: Mauchly Construction Management, Inc. ("MCM").- 5 ^ It is necessary 



26 See Contract for Consultant Services no. 601 dated April 22, 1970, between 
the Bureau of Building Construction and McKee-Eerger-Mansueto , Inc. Date 
supplied from approval dated April 22, 1970 by Donald R. Dwight of Memorandum of 
Approval #70-80, reouesting approval of contract, including fees for services, 
between the EEC and MBM, for project management services on Project U67-A #2A. 

27 See chart, "MEM Contracts for Project Managment Services at UMass/Eoston," 
prepared by Special Commission staff from MEM and BEC documents. This chart was 
introduced as Exhibit 7 at a hearing of the Commission, Sp. Comm. 5/28/80 at 12. 



28 



Elias 8/2/79 interview, at 2 



29 The largest contract that MBM ever received was an $8 million contract to 
supervise the rehabilitation of 250 public schools in Chicago. McKee testimony, 
Sp. Comm. 6/26/80 at 105. The contract was awarded in 1973 and is briefly 
discussed in Appendix B, below. Another large contract that MBM received was a $2 
million contract received in 1972 for work at the Philadelphia International 
Airport. See letter dated June 29, 1972 from Gerald McKee, Jr. to "MBM Directors 
and Investors," announcing Philadelphia airport contract. That contract, which 
was terminated prior to the airport's completion, is also discussed in Appendix B 

30 Pinancial statement of McKee-Berger-Mansueto , Inc. and Subsidiaries, year 
ended April 30, 1971, prepared by Laventhol Krekstein Horwath & Horwath, at 3. 
Hirshberg 6/20/79 interview, at 2. Notes of 6/21/79 interview of former MBM 
Finance Director Andrew H. Serell by Special Commission staff, at 3. 

31 Notes of 6/18/79 interview of Gerald McKee, Jr. by Special Commission 
staff, at 2-3. 

32 Notes of 7/25/79 interview of Peter T. Pallotta by Special Commission 
staff , at 3. 

3^ Financial statements of Mauchly Construction Management, Inc. from August 
1, 1970 to July 31, 1971, prepared by Laventhol Krekstein Horwath & Horwath, at 
1-3, 5. Financial statements of McKee-Berger-Mansueto, Inc., year ended April 
30, 1972, prepared by Laventhol Krekstein Horwath & Horwath, at 6. 



- 9 - 
to give some background information about MCM since some of the activities of MCM 
and its key employees are significant to later events involving MEM. 

MCM was a direct descendant of Mauchly Associates, Inc., a company founded in 



April 1559 by John W. Mauchly 



34 



Dr. Mauchly was the co-inventcr of the first 



all -elect rcnic computer. * Mauchly Associates had been formed to apply seme of 

the new techniques meae possible through computer technology . "^ One such 

application was computerized "critical-path method" ("CPM") scheduling of 

construction projects. Although Mauchly Associates became a leader in 

CPM,^ Dr. Mauchly's scientific abilities did not succeed in making Mauchly 

39 

Associates a profitable corporation, and it was acquired in 1968 by a 
conglomerate -- Scientific Resources Corporation ("SRC"). SRC also came to 
have financial problems, ^ and in July 197C, the prcject management division of 
SRC (which had been acouireo from Mauchly Associates) was sold to a croup whose 
finances were arranged by a prominent Palestinian businessman based in Beirut, 
Lebanon: Maurice Khoury. Khoury was a Eeirut- and London-trained 



34 "The Mauchly Story," undated flyer prepared by Mauchly Associates, Inc. 

35 id. 

36 id. 

37 id. 

38 id. 

39 Notes of 8/5/79 interview of former Scientific Rescurces Corporation 
("SRC") Vice Fresident Robert K. Stern by Special Commission staff, at 1. 
Registration Statement dated February 28, 1969, filed by SRC with SEC, at 16. 



40 



SRC Registration Statement 2/28/69, at 5 



41 Annual Report of Scientific Resources Corporation, year ended September 30, 
1970, filed with SEC, at F-3. 

42 Letter dated July 24, 1970 from Mauchly Associates Vice President Don A. 
Mayerson to Mauchly Construction Management President Daniel J. Shields 
concerning an agreement in principle to sell Shields the project management 
division of Mauchly Associates, a wholly owned subsidiary of SRC. See also 
Fallotta 7/25/79 interview, at 1-2; notes of 1C/9/79 interview of Peter T. 
Pallotta by Special Commission staff, at 1; testimony of Daniel J. Shields, Sp. 
Comm. 6/2/80 at 5. 



- 10 - 

economist. 3 He was also familiar with wealthy Arab businessmen looking to 
invest in American firms and with Arab bankers willing to lend money to American 
enterprises . 

Khoury in early 1971 formed a holding company, International Management 
Services, Inc. ("IMS"), which acquired MCM.^ 5 IMS came to have other 
subsidiaries, including a fledgling television station in Eahrain (RTV-Eahrain 
Ltd), a hotel in Beirut ( Transarabian Hotels), and a consulting firm based in 
Beirut (Associated Business Consultants, Ltd).^ 6 In addition to providing 
funds to keep MCM operating, IMS sought to utilize MCM ' s abilities in CPM for 
clients engaging in construction in the Middle East. 

By late 1970 or early 1971, there were reasons why it seemed to make sense 
for MBM and MCM to combine forces. From MBM's point of view, MEM was in 
financial difficulty and could use the infusion of cash that might be possible 
from dealing with Khoury. McKee felt it could be worthwhile to enter the 
emerging Arab market and was also impressed with MCM's President, Daniel J. 
Shields. Uncer Shields's leadership, MCM had obtained several public 
contracts in New York where, despite its being MEM's home base, MEM had never 

Li P 

been very successful. Moreover, MCM had made many proposals -- which were 
costly and time-consuming to put together and execute -- for contracts all over 



the country, several of which seemed likely to be awarded to MCM 



49 



4-- Interview of Maurice Khoury on 5/26/80 by Special Commission staff. 

44 McKee testimony, Sp. Comm. 6/26/80 at 110-111. Serell 6/21/79 interview, 

at 2. 

45 Memorandum dated April 19, 1971 from MCM Vice President A. B. Zanchettin to 
all MCM management personnel "Subject: International Management Services, Inc." 

46 ^.d. Also, letter dated February 22, 1973 from IMS Finance Director Andrew 
H. Serell to attorney Hartley Chazen, accompanied by corporate chart and brief 
Descriptions of companies comprising IMS. 

47 McKee 6/18/79 interview, at 2-3. 

48 Ld. at 3. 

49 _ic[. at 2. Minutes of December 17, 1971 special meeting of the MBM board of 
directors, at 3. 



- 11 - 

There were advantages in a merger from MCM's and IMS's standpoints, as well. 
MBM was holding the "flagship" public project management contract in the United 
States -- the UMass/Eoston job -- and MBM seemed from outward appearances to be 
large anc prospering, ° in contrast to MCM. ^ 

Shields and McKee were, in addition, receiving encouragement and advice that 
they shoula merge MCM and MBM from a New York businessman named Jerre Sans. Sans 
helped bring Shields and McKee together and stood to make a substantial finder's 

CO 

fee if the acquisition were consummated. " 

In May of 1971, Shields and McKee reached what might be termed an "agreement 
to agree." 53 By late August or early September of 1971, MEM and MCM had 
informally combined forces," and the formal acauisition took effect on 
December 31, 1971, when MEM purchased all of the outstanding stock of MCM from 
IMS. 55 

During 1972, MBM's new MCM subsidiary won a $2 million contract from the 
Philadelphia International Airport. MCM's Shields soon became more prominent 



in the sales ana manaaement of MBM. 



57 



50 Memorandum dated August 31, 1971 from Daniel J. Shields to "All Employees 
[of MCM, Inc.]" regarding the merger with MEM. 

51 Fallotta 7/25/79 interview, at 3. 

52 Letter dated July 16, 1971 from Daniel J. Shields to Jerry [ sic ] Sans 
confirming finder's fee commitment concerning any MBM-MCM agreement . Sans has 
also been known as Gerard Santini. 

53 Letter dated May A, 1971 from Gerald McKee, Jr. to Dan[iel] Shields 
outlining proposed acquisition agreement. 



54 Pallotta 7/25/79 interview, at 2. 
9/8/71 reads "Mauchly move in." 



Desk calendar of Jack S. Thomas at 



55 Minutes of December 17, 1971 MBM board of directors special meeting, at 
2-5. Financial statements of McKee-Berger-Mansueto , Inc. and Subsidiaries, year 
ended April 30, 1972, prepared by Laventhol Krekstein Horwath & Horwath, at 6. 

56 See letter dated June 29, 1972 from Gerald McKee, Jr. to "MEM Directors and 
Investors" supra n. 29. 

57 Notes of 7/24/79 interview of Anthony E. Mansueto by Special Commission 
staff , at 6 . 



- 12 - 

The Combining in 1972-73 
with IMS 

In 1972 MBM and IMS (MCM's former parent corporation) took the first steps 

toward formal merger by forming a jointly owned company -- McKee 

c c 

International"' -- to seek project management contracts in the Middle 
East. ' A formal merger of IMS and MEM occurred at the end of 1972, and a 
restructuring of officerships took place in 1973. 61 Shields became President 
of MEM (which included what had been MCM), 62 and McKee moved up to become 
Chairman of the Beard of MEM and President of IMS. Khoury remained as IMS's 



Chairman 



64 



By the spring of 1973, the compatibility between McKee and Shields had 
dissolved end each was determined to force the other out of the company. Cn 
July 15, 1973 at a board meeting held in Beirut, Lebanon, McKee succeeded in 
ousting Shields. 66 Shields had come to the meeting thinking that he would 
convince the boara to fire McKee, based upon a financial analysis prepared by 
Shields and MEM comptroller Peter T. Pallotta which attempted to show that McKee 
hao been siphoning off hundreds of thousands of dollars from MEM. McKee, in 
turn, attempted to portray Shields as a man with gangster connections 



58 



McKee testimony, Sp. Comm. 6/26/80 at 1C8-109. 



50 _I_d' See also notes of 4/3/80 interview of Gerald McKee, Jr. by Special 
Commission staff, at 1. 

60 See letter dated January 17, 1973, from Gerald McKee, Jr. to Milton Israel 
announcing that the December 11, 1972 "agreement and plan of reorganization" 
involving MBM and IMS had been closed. 

61 Minutes of February 5, 1973 special meetino of MBM's board of directors, at 
1, 5. 

62 _I_d. See also memorandum (on IMS letterhead) dated February 16, 1973 from 
Gerald McKee, Jr. to "All MBM Staff." 

6 ' jjj. See also memorandum (on IMS letterhead) dated February 16, 1973 from 
Gerala McKee, Jr. to "All IMS/MEM Staff." 

64 McKee testimony, Sp. Comm. 6/26/80 at 109. 

65 Shields testimony, Sp. Comm. 6/2/80 at 87-89. Mansueto 10/10/79 interview, 
at 4. 

6 6 Testimony of Gerald McKee, Jr., 13 M/M 3/2/79 at 160-161. 

6 7 Shields testimony, Sp. Comm. 6/2/80 at 86-90. 



- 13 - 

and as an unstable individual who had convincingly threatened on more than one 



occasion to kill McKee 



68 



McKee, as noted, prevailed at the Eeirut board 



meeting, and both Shields and Pallotta were fired. ° 

Despite the circumstances of Shields's terrrinat ion , McKee signed an agreement 

with Shields in September 1973 calling for Shields to be paid $25,000 per year 

7fl 
for five years as a "consultant." The agreement contained a modified 

non-competition clause, the alleged violation of which was eventually used as a 

basis for terminating payments to Shields. 

In the meantime, the IMS/MEM financial situation deteriorated as the 1970s 



cont inuea 



72 



MBM fell hundreds of thousands of dollars behind in its 



withholding taxes, fell behind in rent and credit card payments, 



68 See letter ("Personal & Confidential"), stamped "DRAFT Jun 21 1973 Monasch 
& Chazen," to Maurice Khoury . This draft probably was prepared by or for 
attorney Hartley J. Chazen. 

69 Pallotta learned he was fired on Monday, July 16, 1973. Pallotta 7/25/79 
interview, at 5. 

7C Consulting Agreement dated September 26, 1973, signed by Gerald McKee, Jr. 
(for MBM) and Daniel J. Shields. See minutes of 9/26/73 special meeting of MBM * s 
board of directors, at 1-3. 

7 1 Letter dated December 30, 1974 from D[onald] W. Zeioler to Arnold Stream, 
Esq., "Subject: Daniel J. Shields." Memorandum ("Confidential") dated April 30, 
1975 from "Jerry" [Gerald McKee, Jr.] to Stanley Emerson. See generall y Chapter 
X , infra . 

72 See Financial Statements of McKee-Eerger-Mansueto , Inc. and Subsidiaries, 
years enaed December 31, 1974 and 1973, prepared by Laventhol & Horwath, at 1-2. 

7 ^ See memorandum dated February 12, 1976 from "H.J.C." [attorney Hartley J. 
Chazen] to "A.C.S." [attorney Arnold C. Stream] re: Lipper-Ghazoul , at 4. 

7Z; See , e.g. , letter [undated; probably from 1973] from A. Melvin of Ledisco 
Financial Services to International Management Services, Inc., reauiring return 
of two Carte Blanche cards (expiration date 3/74), because credit privileges had 
been revoked; notes of 7/9/79 interview of Daniel J. Shields by Special 
Commission staff, at 5; Shields testimony, Sp. Comm. 6/2/80 at 76-77; minutes of 
August 4, 1972 special meeting of MEM's board of directors. 



- 14 - 

engaged in check kiting in order to meet payroll, 75 and defaulted on hundreds 
of thousands of dollars of borrowings it had made. 76 

Since MEM's major project management contracts appear to have been 
profitable, 77 it should be explained that MEM's and IMS's financial 

7 R 

difficulties appear to have been due to overexpansion , payment by the 
corporation of personal expenses of certain executives, large "advances" and 
"loans" to officers that were not repaid, 80 expensive sales proposals, 8 and 
unsuccessful investments in foreign operations not related to project 



75 Fo 

payrol 
asked 
only $ 
person 

time . 

after 

source 

bounci 

purpos 

includ 

$35,00 

Co. of 

7/26/7 

for $3 

cash d 

ending 

entrie 

$35,00 

staff, 



r exampl 
1 on tim 
to "loan 
600 in h 
al check 

He was 
the payr 
s to "re 
ng. har 
e . The 
i n g the 
(on Ha 

New Orl 
3; MCM c 
5,000 (o 
isbursem 

7/23/73 
s dated 
0; notes 

at 1. 



e , in 
e . To 
" $35, 
is ban 

for $ 
assure 
oil wa 
pay" h 
ding a 
Commis 
follow 
rding ' 
eans , 
ash re 
n MCM 
ents b 

on it 
7/9/73 

of 7/ 



July 

deal 
000 o 
k ace 
35,00 
d tha 
s pai 
im th 
creed 
sion 
ing: 
s ace 
LA. ; 
ceipt 
accou 
ook e 
s ace 
, 7/1 
11/79 



1973 
with 
f his 
ount . 
he 
t bef 
d) , M 
e $35 
to d 
learn 
Willi 
ount 
bank 
s boo 
nt no 
ntry 
ount 
6/73; 
inte 



MEM did 

the si 

person 

Hardi 

would e 

ore his 

BM woul 

,000 an 

o this, 

ed of t 

am F . H 

no . 275 

stateme 

k entry 

. 028-1 

for 7/9 

no. 020 

MEM ch 

rview o 



not have su 
tuation, MEM 
al funds to 
ng was told 
nable MEM to 

$35,000 che 
d receive su 
d thereby ke 

using his N 
his by means 
arding check 
-324-3 at In 
nt for that 

7/9/73; MCM 
-042838 at C 
/73; MEM ban 
-1-049491X a 
eck #6140 da 
f William F. 



fficient funds to me 
salesman William F. 
MEM -- even though H 
that if he would giv 
issue its payroll c 
ck to MEM could boun 
fficient funds from 
ep his check to MEM 
ew Orleans bank acco 
of documents and in 
#194 dated 7/6/73 t 
ternational City Ean 
account for the peri 
check #724 dated 7/ 
hase Manhattan Bank, 
k statement for the 
t Chase Manhattan Ea 
ted 7/6/73 to Hardin 
Harding by Special 



et its 

Harding was 
arding had 
e MEM~a 
hecks on 
ce (but 
other 
from 

unt for this 
terviews , 
o MBM for 
k & Trust 
od endina 
9/73 to MBM 

NY); MCM 
period 
nk, NY, 
g for 
Commission 



76 See , e.g ., Complaint, Greater Washington Industrial Investments, Inc. v. 
International Management Services, Inc. and McKee-Eerger-Mansuet c , Inc. , 73 C"i 
1697 (S.D.N.Y.), filed-April 6, 1975. 

77 See , for example, the discussion of the UMass/Boston contract in Chapter 
VI, infra. 



78 



See Hirshberg 6/20/79 interview, at 2 



See notes of 8/7/79 interview of Samuel Eeckerman by Special Commission 
staff, at 1, 7. 



80 See minutes of October 3, 1975 
at 4; Hirshberg 6/20/79 interview, 
investigator James J. O'Neill, Sp. 
aovances to McKee anc Mansueto for 
repaid, entered as O'Neill Exhibit 



special meeting of MEM's board of directors, 
at 2; Testimony of Commission senior financial 
Comm. 6/25/80 at 35-37; a chart of loans and 
the years 1969-1973 that apparently were not 
14, id. at 35. 



81 Notes 
staff, at 



of 
2 



11/12/79 interview with Seymour Eerger by Special Commission 
; Mansueto 7/24/79 interview, at 7. 



15 - 



management 



82 



The Separation in 1975 
From IMS 

In January of 1975, IMS borrowed $150,000 from a company named Spire Capital 

Services, Inc. 6 - 5 MEM served as collateral for the loan. 8 In April 1975, 

IMS defaulted on its obligation to repay the $150,000 and Spire seized the 

fl 5 
collateral (MBM), thereby becoming sole owner of MBM. J McKee continued as 

President of MEM. 86 Khoury had no further ascciation with MBM. 87 

The Termination of 
MEM in 1976-79 

Even in its stripped-flown form, MBM could not restore itself to financial 

ft ft 
epuilibrium . °° Damaged by several factors, one of which undoubtedly was 

adverse publicity emanating from Massachusetts in the aftermath of the 

co 

DiCarlo-MacKenzie trial, MEM entered 1978 in severe financial straits. 
According to MBM Vice President Eerger, the coup de grace was an unsuccessful 
contract application that MBM made in the Middle East in the late 1970s: MEM 
spent substantial amounts of money pursuing the contract and was left in an 
untenable financial position when the contract was lost. 

Toward the end of 1978, McKee, Eerger, and Mansueto went their own ways, and 

C 1 

MEM became defunct." McKee formed "McKee Associates, Project 



82 MBM financial statements, years ended 12/31/74 and 1973, supra n. 72, at 
9. Hirshberg 6/20/79 interview, at 2. 

8:5 See memorandum from Chazen to Stream, supra n.73, at 16-22; financial 
statements of MBM and subsidiaries, years ended December 31, 197& and 1973, supra 
no. 72, at 14. 

64 Id. 

65 Id. 
86 id. 

8 ' Khoury 5/26/60 interview. See also discussion of the Khoury affidavit in 
Chapter V, infra . 



88 



See memorandum from Chazen to Stream, supra n. 73, at 28. 



85 See , e.g ., memorandum to files dated February 1, 1978 from HJC [Hartley J. 
Chazen ] , re: Eoston Press Involvement, at A; copies of the memo were sent to 
McKee and Mansueto and attorneys Arnold Stream and William Looney. 

5C Notes cf 11/12/79 interview of Seymour Eeroer by Special Commission staff, 
at 2. 

51 McKee testimony, 12 M/M 3/1/79 at 72-73. 



- 16 - 

Managers, Inc." 92 Eerger formed "Eerger A Associates, Cost Consultants, 

9 3 

Inc." Mansueto became the president of Comprehensive Management Services, 
Inc., a relatively new project management subsidiary of a larger corporation 
based in Detroit, Michican.^ 



52 See. letterhead of letter dated September 13, 1979 from Gerald McKee, Jr., 
to Arnold Stream. 

95 Berger 11/12/79 interview, at 1. 

94 Mansueto testimony, 2 M/M 2/13/79 at 33. See letterhead of letter dated 
August 23, 1979 from Cathy Palkowski, secretary of Anthony E. Mansueto, to the 
Commission . 






17 
CHAPTER III 

MBM'S ACTIVITIES 

IN MASSACHUSETTS 

PRIOR TO 1969 



Activities During 

the Peabody Administration 

(1963-64) 



MBM's first concerted attempts to do business in Massachusetts appear to have 
occurred in 1963, with MEM's sales efforts being conducted primarily by Anthony 

Mansueto. The Commission does not have Mansuetc's diaries from 1963, but it 

2 3 

appears from other MEM records and from testimony'' that MEM's first 

significant contact with Massachusetts occurred through dealings with the firm of 

Frank R. Masiello, Jr. & Associates, Inc. The Masiello firm apparently was just 

one of several architectural firms to which Mansueto sent "blind" letters 

soliciting estimating work for MEM. As a result of the letter to the Masiello 

firm, a meeting was arranged. 

Mansueto went to the Masiello office in Worcester on January 8, 1964.-'' 

The Masiello firm was the architect for certain work at the Concord 



1 MEM apparently had a few small jobs for clients in Massachusetts prior to 
1963, according to cards that may be described as "job cards." It is impossible 
to tell from these cards what the exact value of such contracts may have been, 
but it is likely that the jobs were for $1,000 or less, based upon other 
information . 

2 See MBM sales department file card for Frank R. Masiello, Jr. & Assoc, Inc. 

3 See testimony cf Anthony E. Mansueto, 2 M/M 2/13/79, at 39; Mansueto 
testimony, P. A. 5/23/78, at 6; testimony of Frank R. Masiello, Jr., Sp. Comm. 
6/16/80 at 4-6. 

A Mansueto testimony, supra n. 3. 

5 Mansueto pocket diary for 1/8/64; MEM file card for the Masiello firm, supra 
n. 2. 



18 
prison, and Mansueto expressed interest in a subcontract to provide estimating 
services. Masiello was impressed by Mansueto and pursued the matter by 
introducing Mansueto to BBC Director Horace M. Chase on February 6, 1964, at 
which time Chase "verbally approved" MBM for estimating work at Concord at a fee 
of $1,3CC. 8 In June of 1964, the Masiello firm engaged MEM to do cost 
estimating on the Mill Pond Road Housing for the Elderly project for a fee of 
$600. S 

Mansueto and Frank Masiello quickly developed a close personal 
friendship. Although Masiello did not have any large-scale contracts that he 
could award to MBM, Masiello agreed to provide introductions for Mansueto to 
people who could help MBM obtain contracts in Massachusetts. Masiello was a 
donor and fundraiser for then-Governor Endicott Peabody, z and one of the first 
introductions that Masiello provided was to Sherwood J. ("Woody") Tarlow, 
Peabocy's chief fundraiser. It was the policy of the Peabody administration 
to give preference to firms whose principals contributed to the Peabody 



campaign, ana Mansueto was quickly apprised of this. Mansueto's calendar 



6 Contract between Commonwealth of Massachusetts and Frank R. Masiello, Jr., 
Project No. P61-1 ,. Title : "Repair Walls and Guard Towers," Location: "M.C.I. , 
Concord . " 

7 MEM file card for the Masiello firm, supra n. 2. 

S Mansueto pocket diary for 2/6/64; MEM file card for the Masiello firm, supra 
note 2. 

9 MEM file card for the Masiello firm, supra n. 2. 

10 Mansueto testimony, P. A. 5/23/78 at 6-7; 7 M/M 2/20/79 at 12. 

H Mansueto testimony, P. A. 5/23/78 at 8, 14; 2 M/M 2/13/79 at 42. Frank 
Masiello testimony, Sp. Comm. 3/27/80 at 19-20; Sp. Comm. 6/16/80 at 17-19. 

12 Testimony of Peabody finance chairman Sherwood J. Tarlow, Sp. Comm. 4/7/80 
at 27-26; Frank Masiello testimony, Sp. Comm. 6/16/80 at 21. 

Frank Masiello testimony, Sp. Comm. 6/16/80 at 7. Tarlow testimony, Sp. 
Comm. 4/7/80 at 12. 

14 Testimony of Endicott Peabody, Sp. Comm. 6/19/80 at 10-14; testimony of 
William A. Waldron, Sp. Comm. 4/9/80 at 23-25, 29-34; Tarlow testimony, Sp. Comm. 
4/7/80 at 53, 73-75. 

15 Frank Masiello testimony, Sp. Comm. 6/16/80 at 7-8. 



19 



16 



reveals that he was introduced to Tarlow by Masiello on February 25, 1964, 
Less than a week later, Mansueto's diaries contain the entries: "Money to 
Masiello $1,000" 17 and "Ch[ec]k to Masiello." 18 Mansueto also made entries 
mentioning Tarlow and containing telephone numbers for Tarlow. ^ 

Cn March 15, 1964, Mansueto and his wife -- along with Frank Masiello and his 
wife -- attended a birthday party for Governor Peabody on the 11th floor of the 
Statler Hilton Hotel (now the Park Plaza) in Boston. ° According to Peabody 
campaign records, Mansueto paid $1,000 for tickets. z ^ Hundreds of people 



22 

attended this affair. Mansueto made it a point to be introduced to the 

r 23 

Governor. 

Mansuetc had (or, at least, sought) further contact with fundraiser Tarlow in 
the ensuing months, judging from Mansueto's calendars. This contact, and 
further contact with Frank Masiello, apparently culminated in a meeting involving 
Governor Peabody, Mansueto, and Frank Masiello at 2:15 p.m. on June 3, 1964 at 
the Governor's fundraising suite in the Statler Hilton Hotel. 25 



16 Mansueto pocket aiary for 2/25/64. 

I" 7 Mansueto pocket diary for February 1964 "next month [ i.e. , March]" page; 
Mansueto pocket diary for 3/2/64. 

18 Mansueto pocket diary for 3/4/64. 

19 Mansueto pocket diaries for 2/64 ("next month" page), 3/4/64. 

20 Mansueto pocket diary for 3/15/64. Mansueto testimony, P. A. 5/23/78 at 14. 

21 Schedule of contributions to Campaign for Elective Office filed by Governor 
Peabody Birthday Dinner Committee on March 23, 1964. Mansueto's gross pre-tax 
salary in 1964 appears to have been $18,200. See weekly salary listinas contained 
on MBM "Pension List" dated June 17, 1965. 

22 Mansueto testimony, 7 M/M 2/20/79 at 43. 

23 Mansueto testimony, P. A. 5/23/78 at 14. 

2A Mansueto pocket diaries for 3/20/64, 4/27/64, 5/18/64, and June 1964 "next 
month" page. 

25 Mansueto pocket diary for 6/3/64; Frank Masiello testimony, Sp. Comm. 
6/16/80 at 7; testimony of William V. Masiello, Sp. Comm. 6/24/80 at 5. For the 
functioning of the fundraising suite in oeneral, see Frank Masiello testimony, 
Sp. Comm. 3/27/80 at 24-36. 



20 
Apparently convinced that MBM should establish a presence in Massachusetts, 

Mansueto had an "MBM telephone" installed in Masiello's office later in June 
1964, 26 and MBM thereafter indicated in its sales material that it had a 
location in Worcester. 27 

Eusiness in Massachusetts started picking up for MBM. On July 8, 1964, MEM 
submitted a proposal for estimating work on the Division of Employment Security 
Building being constructed for the Government Center Commission. A $3,500 
contract was awarded to MBM on July 12, 1964. 28 MBM also won some other small 
contracts in Massachusetts in 1964. ' 

On September 10, 1964, Governor Peabody lost his bid for renominat ion . 
While the Commission has no evidence that Mansueto thereafter made any further 
contributions to the Peabody campaign, Mansueto's diaries for September 14, 16, 
and 24, 1964 contain the following entries: "Money for Peabody," "$ for 
Feabody," and "1000 - Boston." 31 

Unlike Masiello's firm, which was awarded contracts by the Peabody 
administration after Peabody lost his renomination bid but before Peabody left 

32 

office, MEM apparently was less successful. In February 1965, shortly after 

Peabody vacated the Governor's office, Mansueto lamented in a letter to 



Masiello : 



33 

"Woody Tarlcw - ah, there's a rub. I once had a dream that 

Massachusetts would use MBM to some advantage, but I guess those 

days are long past .... 



26 "Speed letter" dated 6/23/64 from Frank R. Masiello, Jr. to "Tony" [Anthony 
E. Mansueto] of MBM; William Masiello testimony, Sp. Comm. 6/24/80 at 5; Mansueto 
testimony, M/M 2/13/79 at 45. 

27 See , e.g. , MBM invoice form dated April 25, 1967 which lists the following 
locations: New York; Washington, D.C.; Chicago; and Worcester, Mass. 

26 MBM Proposal, dated July 8, 1964, for Division of Employment Security 
Building, accepted July 12, 1964 by Shepley, Bulfinch, Richardson & Abbott, 
architects. See letter dated May 25, 1965 from Joseph P. Richardson to the 
Government Center Commission, "Re: Division of Employment Security Buildino," at 
2. 

29 See charts entitled "Partial List of MBM Contracts in Massachusetts - 
Public and Private: 1964-1969," compiled by Commission staff and introduced as 
McKee Exhibit 2A, Sp. Comm. 6/26/80 at 21. 

30 Peabody lost the September 10, 1964 Democratic gubernatorial primary to his 
Lieutenant Governor, Francis X. Belloti. Commonwealth of Massachusetts, Public 
Document No. 43, Election Stat ist ics-1964 , at 217. 

31 Mansueto diaries for 9/16/64, 9/14/64, and 9/24/64. 

32 See discussion of Masiello & Associates elsewhere in this Final Report. 

Letter dated February 11, 1965 from Anthony E. Mansueto to Frank P. 
Masiello, Jr. 



21 

"Advise me Frank. I made quite an investment in the potential 
Massachusetts market and came out hurting pretty badly. As I said, 
advise me Frank." 



Activities 
During the Volpe 
Administration (1965-68) 



As it turned out, Frank Masiello became a donor and fundraiser for the 
Republicans in Massachusetts after Republican John A. Volpe became Governor in 
1565. Masiello was aware of the influence of Albert P. ("Toots") Manzi, "a 
very powerful political figure," in the Volpe administration. Manzi, a 
Worcester grocer active in Republican politics, was well known for his 
effectiveness in fundraising and his power to influence appointments and contract 
awards." Masiello introduced Anthony Mansueto of MEM to Manzi and to other 
individuals in the Volpe administration who could be helpful in MPM's attempts to 
win public contracts in Massachusetts. Mansueto first met Manzi in October 1967 
through an introduction by Frank Masiello, apparently in October 1967. 
Mansueto testified that he had several subsequent meetings with Manzi during the 
Volpe administration, with some of those meetings taking place in the anteroom to 

TO 

Governor Volpe's office in the State House. y The testimony about Mansueto's 
contact with Manzi finds support in the appointment books that Mansueto 
maintained during the period: 

- Mansueto's appointment book contains an entry on October 12, 1967 

•xq 

indicat inc a meetina with Manzi at 11:30 a.m. 



34 Frank Masiello testimony, Sp. Comm. 3/27/80 at 59-60. 

Id . at 12-13. Masiello knew of Manzi's influence as early as the first 
Volpe administration in 1961-63. Id . 

3 ° See , e.g. , the discussion of Manzi's role in the sections on the Joseph P. 
Gentile School and A New Campus for Holyoke Community College, in Volume 3 of this 
Final Report. 

37 Frank Masiello testimony, Sp. Comm. 6/16/80 at 17-18; Mansueto pocket diary 
for 10/12/67; Mansueto testimony, 2 M/M 2/13/79 at 42. 

38 Mansueto testimony, 2 M/M 2/13/79 at 43-44. 

35 Mansueto pocket diary for 10/12/67. See also sources cited in note 37, 
supra . 



22 

- On February 1, 1968, Mansueto's appointment book shows a home 
telephone number for Manzi. 40 

- Cn August 20, 1968, Mansueto's book indicates meetings at the 
Governor's Office with Manzi and with Dine Patronis (who was an 
administrative aide to Governor Volpe).41 

- An October 30, 1968 entry indicates that Mansueto had lunch on 
that day with Manzi and Masiello in Worcester. Mansueto's 
appointment book for October 29, 1968 -- the day before that 
Worcester meeting -- contains the notation: "$ for Worcester." 

- A November 7, 1968 entry indicates that Mansueto met with 
Manzi -- who by then was a member of the Massachusetts Turnpike 
Authority -- at the Authority's offices in the Prudential 
Center. AA 

- Mansueto's appointment book on November 8, 1968 lists telephone 
numbers for Manzi at the Turnpike Authority and at the Governor's 
office/ 5 

These are only seme of the entries mentioning Manzi in Mansueto's 1968 
appointment books/ 6 

Frank Masiello also apparently introduced Mansueto in 1967 tc Anthony P, 
DeFalco, the Vo'lpe administration's Commissioner of Administration and 
Finance. ' As A&F Commissioner, DeFalco was responsible for selecting or 



4° Mansueto pocket diary for 2/1/68. 

41 Mansueto pocket diary for 8/20/68. 

42 Mansueto pocket diary for 10/30/68. 

43 Mansueto pocket diary for 10/29/68. 

44 Mansueto diary for 11/7/68. At some point after September 1967, MEM 
prepared an "Experience Brochure" for the Massachusetts Turnpike Authority and 
Mansueto appeared before the Authority. It is not clear whether the presentation 
occurred on November 7, 1968 or on some other date. See Exhibit 14B, 4 M/M 
2/15/79, and Mansueto testimony, 4 M/M 2/15/79 at 140-145. 

45 Mansueto pocket diary for 11/8/68. 

46 See also Mansueto pocket diaries for 9/5/68 and 10/31/68, for example. 

47 See Mansueto pocket diary for 7/14/67. See also letter dated June 22, 1967 
from Anthony E. Mansueto to Anthony [P.] DeFalco, concerning an appointment to 
acquaint DeFalco with MEM's services. 



23 

approving the selection of architects and many types of consultants for state 
projects . 

It appears from Mansueto's appointment book that Mansueto first met with 
DeFalco at the State House at 3:30 p.m. on September 7, 1967. A5 Another 
meeting between Mansueto and DeFalco apparently occurred at 10 a.m. on October 4, 
1967. 50 Mansueto met again with DeFalco at the State House on February 1, 
1968; Mansueto's diary entry indicates that the meeting was supposed to start at 
11:00 a.m. but that DeFalco was "late as usual.*' 5 Mansueto's 1968 appointment 
books contain additional entries relating to DeFalco." 

Mansueto also apparently met BEC engineer James J. Cusack through Frank 
Masiello. 53 In 1968, Cusack was the EEC's Chief Examining Engineer and was 
regarded by many people who dealt with the EEC as the brightest technical person 
employed by the BEC and a likely successor to then-EEC Director Horace M. 
Chase. 5A There are several entries relating to Cusack in Mansueto's 1968 
appointment books. 5 In an internal BBC memorandum on September 20, 1968, 
Cusack recommended to EBC Director Chase that MBM be selected for a $26,000 
contract for CFM work. 56 Chase accepted Cusack's recommendation,' and 



*& G.L. c.7 s._30B. 

49 Mansueto pocket diary for 9/7/67. 

50 Mansueto pocket diary for 10/4/67. 

51 Mansueto pocket diary for 2/1/68. 

52 Mansueto pocket diaries for 1/24/68, 2/68 ("next mcnth" page), 3/18/68. 

53 Mansueto testimony, P. A. 5/23/78 at 8. 

54 When Cusack sought the BBC Directorship in 1969, he was supported by 
letters of recommendation by many people in government and in the construction 
field, as demonstrated by letters those people sent to the A&F Commissioner 
Donald R. Dwight. The Commission found such letters at the State Records Center 
in Grafton. See also testimony of James J. Cusack, P. A. 3/21/78 at 102. 

55 Mansueto pocket diaries for 8/20/68, 9/68 ("next month") paae, 10/16/68, 
11/7/68, 11/25/68, 12/9/68. 

56 EEC memorandum dated September 19, 1968 from F. Johnson to "H[orace] M. 
Chase via J[ames J.] Cusack" re: Critical Path Method for Project H64-1. 
(Cusack's handwritten recommendation at the bottom of the memorandum is dated 
9/20/68.) 

57 EEC Memorandum of Approval #69-21, dated October 1, 1968, signed by Horace 
M. Chase and approved (10/7/68) by A. P. DeFalco. 



24 

the job was awarded to MEM on October 7, 1968 by A&F Commissioner DeFalco.^ 

These introductions that Frank Masiello made for Mansueto to well-placed 

individuals during the Volpe administration seem to have proved useful. On July 

24, 1968, Mansueto wrote a memorandum to his assistant, Ivan Soskel, about 

"Massachusetts and other considerations."^ In the memorandum, Mansueto said, 

in part : 

"I spoke to [Frank] Masiello on Monday July 22 and he advised me of the 
following : 

1. DMJM [an architectural firm] has been requested through our 
Massachusetts political friends to use MBM on their new Holyoake [ sic ] 
College project. . . . BBC will soon be advised that we are to be the 
cost consultants for this project. Frank M. suggests we wait until 
after July 29 before we approach EEC on their CPM program, since our 
political friends will be talking to the EEC prior to that time. . . . 

2. I get the general impression from Frank Masiello that we are being 
pushec by the State people and that some of the work that we have got is 
net as coincidental as it might seem - people are beino asked to use 
MEM. ..." 

The CFM program referred to in Mansueto's July 24, 1968 memorandum may have been 

the $26,000 job that was awarded to MBM on October 7, 1968. As to the Holyoke 

Community College project, that is a subject about which Frank Masiello and 

others testified at length before the Commission. According to the testimony, 

which is discussed elsewhere in this Final Report, the principal architectural 

contracts for the design of a new campus for Holyoke Community College were 

awardec starting in 1968 to the Los Angeles, California firm of Daniel Mann 



58 id. 

55 MBM internal memorandum dated July 24, 1968 from Anthony E. Mansueto to 
Ivan Soskel re: "Massachusetts and other considerations." 



25 
Johnson & Mendenhall ("DMJM") in return for DMJM • s agreement — worked out 
through Frank Masiello -- that DMJM would give to Manzi tens of thousands of 
dollars in cash as "campaign contributions" for Republican campaigns. 

Frank Masiello on occasion made direct efforts to help MEM win contracts. 
May 24, 1968, Masiello sent a letter to the City Manager of Worcester 
recommending that MBM be hired to provide cost estimates for the Elm Park School 
(on which Masiello's firm was the architect). MEM received the contract. 

According to Frank Masiello's testimony in 1980 to the Commission, Mansueto 
was well aware by the late 1960's that public contracts in Massachusetts often 
went to those who would pay for them, particularly those who made their 
"contributions" in cash. 63 The "preference" given to "contributors" had 
existed durinc the Democratic administration of Endicott Peabody as well as 



On 



during the Republican administrations of Jchn Volpe 



64 



Having accuired "political friends" in Massachusetts, MEM decided toward the 
end of 1968 to open a small sales office in Boston. By having an actual 
office in Massachusetts, it was felt that MBM would be less likely to be at a 



disadvantage when competing against "Massachusetts firms" for public jobs. 



66 



60 See the section on A New Campus for Holyoke Community College, elsewhere in 
this Final Report. 

61 Letter dated May 24, 1968 from Frank R. Masiello, Jr., to Worcester City 
Manager Francis J. McGrath re: Elm Park School Cost Control Analysis. 

62 "Consultant's Agreement" fcr the Elm Park Replacement School, dated 
September 18, 1968, "signed by Nathan Feder for MEM and by Francis J. McGrath for 
the City of Worcester. 

63 Frank Masiello testimony, Sp. Comm. 6/16/80 at 20-21; Sp. Comm. 3/27/80 at 
69. 

64 Peabody testimony, Sp. Comm. 6/19/80 at 10; Frank Masiello testimony, Sp. 
Comm. 3/27/80 at 8-9, 13-15. 

65 See , e.g ., Mansueto pocket diary for 10/30/68; note sheet, containing the 
date 12/6/68 and apparently written by Mansueto, re: "Boston." 

66 See memorandum dated July 11, 1969 from Gerald McKee, Jr. to "Marty" 
[Martin H.] Heyman, re: "Boston Office Operations." 



- 26 - 

CHAPTER IV 
MBM's PROCUREMENT OF THE 
UMASS/BOSTON PROJECT MANAGEMENT CONTRACT 



Introduction 



In December of 1569, MEM was selected as project manager for the new Eoston 
campus of the University of Massachusetts. In April of 1570, a formal 
contract document was signed calling for MEM to receive a fixed fee of 
approximately $2.3 million and additional fees on a "cost-plus" basis. 
Pursuant to this contract (and extension contracts), MEM eventually received more 
than $5.4 million in total fees. The UMass/Ecston contract was by far the 
largest contract MBM had ever received in terms of fees, being more than ten 
times as large as MEM's next largest contract as of 1969. 

The UMass/Boston contract also apparently was enormously profitable for MEM. 
MBM's own documents reveal that MBM expected more than 50 percent of its 



1 MBM was officially designated by A&F Commissioner Donald R. Dwight on 
December 22, 1969 for contract U67-4 #2A, the UMass/Boston project management 
contract. See letter of appointment dated December 22, 1969, from Donald R. 
Dwight to Walter J. Poitrast, Director of the Eureau of Building Construction; 
letter of appointment dated December 23, 1969, from Walter J. Poitrast to McKee, 
Berger & Mansueto, Inc. 



2 The 

severa 

comput 

other 

furnit 

certai 

Common 

five p 

admini 

Consul 

dated 

Massac 

was de 

by A&F 

fur the 



fix 

1 ke 
er c 
empl 
ure , 
n su 
weal 
erce 
stra 
tant 
Janu 
huse 
laye 
Com 
r di 



ed fe 
y MBM 
osts . 
oyees 

vehi 
bcont 
th to 
nt of 
tive 

Serv 
ary 2 
tts a 
d by 
missi 
scuss 



e wa 

sta 

In 

and 

cles 

ract 

tho 

tho 

serv 

ices 

8, 1 

nd G 

fee 

oner 

ion 



s $2,29 

ff memb 

additi 

for ot 

, and s 

s. MEM 

se subc 

se subc 

ices in 

, " numb 

970, si 

erald M 

negotia 

Donald 

of the 



5,00 
ers 
on , 
her 
uppl 

was 
ontr 
ontr 

reg 
er 6 
gned 
cKee 
tion 

R. 
term 



C. 

as w 
MBM 
reim 
ies ) 

to 
acto 
acto 
ard 
01, 

by 

, Jr 
s; i 
Dwig 
s of 



It wa 

ell a 
was p 
bursa 
. MB 
act a 
rs , a 
rs' f 
to th 
Massa 
Walte 
. , f o 
t occ 
ht of 
the 



s int 
s cer 
aid c 
ble e 
M was 
s mid 
nd ME 
ees f 
ose s 
chuse 
r J. 
r MBM 
urred 
Memo 
contr 



ended 
tain c 
ost pi 
xpense 

also 
dle-ma 
M was 
or MEM 
ubccnt 
tts St 
Poitra 
For 

on Ap 
randum 
act , s 



to c 
ffic 
us 2 
s ( s 
call 
n in 
to r 
's s 
ract 
ate 
st f 
mal 
ril 
of 
ee C 



over 
e , a 
pe 
uch 
ed u 
pas 
ecei 
uper 
s . 

Proj 
or C 
appr 
22, 
Appr 
hapt 



the 
dmin 
rcen 
as f 
pon 
sing 
ve a 
viso 
"Con 
ect 
cmmo 
oval 
1970 
oval 
er V 



of 



salaries of 
istrative, and 
t for salaries 
or office 
to administer 
on fees from the 
payment eaual to 
ry and 
tract for 
number U67-4 #2A, 
nwealth of 
of the contract 
with the sianino 
#70-80. For 
I , infra . 



The total was $5,488,913.65, as determined by Commission staff from the 
records of the Office of the Comptroller of the Commonwealth. See Chart: "MEM 
Contracts for Project Management Services at UMass/Boston , " introduced as Exhibit 
7 at a Commission hearing. Sp. Comm. 5/28/80 at 12. 



MEM's largest contract prior to 



for services 
accordino to 



the UMass/Eoston contract was its contract 
on the Franciscan Hospital in Illinois, at a fee of $485,000, 
former MBM Vice President James E. Elias. Notes of 8/2/79 interview 



of James E. Elias by Special Commission staff, at 2. Elias was manager of the 
Chicago branch office of MBM through 1970. See also MBM Preliminary Prospectus 
dated 7/25/69, filed with the Securities and Exchange Commission, at 10. 



- 27 - 

$2.3 million fixed fee to be profit, and the other fees that MEM received on 
the contract were computed on a "cost-plus" basis (which would seem automatically 
to entail additional profit). 

MBM applied for and won the UMass/Eoston contract at a time when MEM appears 
to have been desperately in need of receiving a large and lucrative contract. As 
of late 1969, MEM had incurred major expenses in anticipation cf floating a 
public offering of its stock, yet the public offering had fallen through in 
December. 6 Had MBM failed to obtain the UMass/Eoston contract, it might well 
have gone out of business in early 1970, according to MBM's outside auditor. 
It is not surprising, therefore, that MEM made an all-out effort to obtain the 
UMass/Boston contract, as discussed in the following sections of this report. 

MBM's Decision in Late 1968 

or Early 1969 to Make a Major Effort 

to Win Large Public Contracts in Massachusetts 

At some point late in 1968 or early in 1969, MBM decided to pursue business 

in Massachusetts on a more intensive basis than it had previously done. Instead 

of occasional forays into Massachusetts by MEM salesmen such as Anthony Mansueto 

and Ivan Soskel, MEM decided to assign one of its employees tc be a resident 

full-time salesman for the New Enoland area. 



5 MEM's analysis of the $2,295,000 fixed fee identified costs of $1,014,052 
and gross profit of $1,280,948. Document headed "U-Mass Eoston Campus 459-004 
Summary of Budget" from MBM files, identified by MBM President Gerald McKee, Jr 
as produced by~MBM. McKee testimony, Sp . Ccmm. 6/26/80 at 38-40. For further 
discussion, see Chapter VI, infra . 

6 See discussion in Chapter II, supra . 

7 Notes of 6/20/79 interview cf Arthur 0. Hirshbera by Special Commission 
staff, at 1. 



- 28 - 

Martin Heyman, the person selected to be MBM's Boston "regional manager," had 

p 
joined MEM as one of the firm's first employees. After working for MEM for 

almost a decade as an electrical estimator, Heyman expressed an interest in 

c 

opening and managing the Eostcn office. He began his sales efforts in January 

in 11 

1969 ±u anc tcok up residence in Boston in June 1969. 

In a memorandum from McKee to Heyman regarding "Boston Office 

12 

Operations," McKee explained the three major reasons behind MEM's decision 

to establish a permanent physical presence in Eoston. First, MEM had concluded 
that a large segment of important potential sales would be unavailable to 
out-of-state firms such as MEM; thus, a local office was necessary in order to 
avoid discrimination in contract awards. Second, the presence of a local office 
would be reassuring to potential clients. Third, MBM's ability to handle larger 
and longer-tenured contracts would be enhanced if MBM had a local office which 
could serve as a base of operations and logistic support. 

But McKee maae clear in the memorandum that much of the work acouired from 
clients in the Eoston area would still be performed from MBM's New York office 
and that the new Boston office should be considered "an organic part of the New 
York operation" with "[njothing [being] done to set aside or distinguish Eoston 
as a separate entity unless absolutely necessary for the orderly administration 
of the Eostcn office." 13 

Heyman was anxious to prove himself a capable salesman. Thus, he pursued 
both public and private work and sent in regular reports of his activities. The 



8 "McKee-Berger-Mansueto , Inc., New York Office - Personnel Listing," dated 
February 1970, gives Heyman's "seniority date" as 12/4/59. The company was 
formed by McKee, Eerger, and Mansueto on February 18, 1959. 

9 Notes of 8/21/80 interview of Martin H. Heyman by Special Commission staff, 
at 1-2. 

1° Notes of 6/26/79 interview of Martin H. Heyman by Special Commission staff, 

at 1. 

11 Id. 

12 Memorandum dated July 11, 1969 from Gerald McKee, Jr. to "Marty" [Martin 
H.] Heyman re: "Boston Office Operations." 

1 3 Id. at 2. 



29 



14 



Commission has had access to some of those reports. 

In February or March of 1969, Heyman prepared a chart of decision-makers in 
the Massachusetts state government. At the top of the chart was the name of 
Donald Dwight, Commissioner of Administration and Finance ("A&F"). Dwight had 
assumed that position -- which included the responsibility for selecting 
designers and certain kinds of consultants for state buildings -- in January 
1969. 6 Dwight was appointed to the position as one of the first acts of 
Massachusetts ' s new Acting Governor, Francis W. Sargent. Sargent had been 

Lieutenant Governor until Governor John A. Volpe accepted a position in the 

1 P 
Cabinet of the newly elected President Richard M. Nixon/ L 

Although Anthony Mansueto had developed a friendship, or at least an 

acauaintanceship , with the former A&F Commissioner, Anthony DeFalco, 

Mansueto did not know Dwight. At the bottom of Martin Heyman's chart of 

Massachusetts state officials, Heyman wrote (apparently to Mansueto): "Can 

former Commissioner DeFalco put in a good word .. .with .. .Dwight ... ?" An 

additional note indicated that EEC engineer James J. Cusack had agreed to 

introduce Heyman to other EEC employees. 



MEM's Attempts to Win a 

Contract to Provide a 

Management Information System for the EEC 

MEM did receive a few small contracts from the Commonwealth of Massachusetts 



14 E.g. , documents headed "Activity Report of Martin Heyman -- Wk. end. 
3/227697" "M. Heyman -- Sales Report -- thru A/5/69." 

15 Handwritten document headed "State of Massachusetts -- Administration," 
identified and approximately dated by Heyman in 6/26/79 interview, at 4. 

16 Testimony of Donald R. Dwight, P. A. 3/15/78, at 14. 

1 7 Id. at 13-14. 

18 Id. at 11. 

I 5 Notes of 10/10/79 interview of Anthony E. Mansueto by Special Commission 
staff, at 1; Heyman 6/26/79 interview, at 3. 



20 



Mansueto testimony, P. A. 6/9/78 at 78-79, 



30 - 



in late 1968 and early 1969. zl In each of these contracts, MEM apparently was 
selected by the project architect, and formal approval was then granted by the 



EBC 



22 



The first significant contract that MEM sought directly from the Commonwealth 
seems to have been a contract to prepare a management information system for the 
EBC. ^ The contract apparently had the potential of being worth hundreds of 
thousands of dollars. In a memorandum apparently written in late February or 
early March of 1969, Heyman described the scope of the work as being a study of 
procedures, administrative techniques, construction budget preparation, and other 
matters, as well as consideration of the possibility of introducing electronic 
data processing to the BBC. J 

Heyman wrote in the memorandum that it "looks like [the] Commissioner of 
Admin. & Finance will reauest proposals." Heyman reported that EBC Director 
Horace M. Chase had received unsolicited proposals from MEM and from another firm 
named Arcon. Heyman said that he had spoken with an individual from A&F who 



21 F 

Massa 

firm 

Insti 

459 

and M 

Archi 

dated 

Horac 

engag 

on Ho 



or example, MEM received a $26, COO contract from the Commonwealth of 
chusetts on October 7, 1968 to perform CPM consulting for the architectural 
of Desmond & Lord on the New Public Health Laboratory and Power Plant at the 
tute of Laboratories in Jamaica Plain. Contract for Consultant Services No. 
ated October 7, 1968, Massachusetts State Project No. H64-1, between the EBC 
BM. MBM was hired as cost consultant at a fee of $1,500 for Curtis h Davis 
tects on a study of updating buildings and utilities at MCI Norfolk. Letter 

February 13, 1969 from Peter R. Stark of Curtis & Davis, Architects, to 
e M. Chase, re: "Study ... Norfolk Prison ... No. P-68-5R." MBM was also 
ed by Daniel Mann Johnson & Mendenhall ("DMJM") for cost estimating services 
lyoke Community College, Mass. State Project No. EJ 68-2. 



22 See , e.g. , letter dated July 29, 1969 from BBC Director Horace M. Chase 
(signed by Acting BEC Director Walter J. Poitrast) to Daniel Mann Johnson & 
Mendenhall ("DMJM") approving DMJM's request to employ MEM for estimating on the 
Holyoke Community College project. 

23 Mansueto testimony, P. A. 5/23/78 at 8. 

2Zl Since the BBC request for proposals on a management information system 
dated April 10, 1969 set the anticipated value of'the contract at $40,000 to 
$80,000, and since Donald R. Dwight's letter to James D. Fitzgerald dated May 6, 
1969 specified that "the proposal for BEC represents a major step down from what 
the agency had originally proposed," it may be inferred that the first BBC 
proposal was worth well over $100,000. See text accompanying notes 45-47, infra . 

25 Undated memorandum identified by Martin H. Heyman (Heyman 6/26/79 
interview, at 5) as being in his handwriting, entitled "Management Info. System 
for BEC." This document contains handwritten comments by Anthony E. Mansueto, as 
well as the notation "Mtg was held we think on this Thurs. 3/13" (which dates the 
document as March 1969). 



- 31 - 

"promised that we [MBM] will be invited to propose," but Heyman worried: "Is our 
invitation only a c[o]urtesy? Is it possible that some less qualified firms will 
be proposing? Is a formal reouest necessary?" 

Mansueto, upon reading Heyman's memorandum, wrote some comments across the 
bottom of the page: "Mtg was held we think on this Thurs. 3/13." He also wrote, 
"3/14 - Called Manzi © his office. Wants us to push for prop[osal]. He will 
introd[uce us] to Commissioner." 

A meeting with A&F Commissioner Donald R. Dwight was, in fact, arranged, and 
it took place less than two weeks later. On March 25, 1969, Manzi introduced 

Mansueto and Heyman to Dwight, with whom they discussed the management 

2 6 

information system for the EEC. According to Heyman, Dwight was "very 

27 

cordial and friendly." Immediately following the meeting with Dwight, 

O Q 

Mansueto and Heyman met with Dwight 's deputy, Charles E. Shepard. 

While in Eoston on March 25, 1969, Mansueto had lunch with EEC engineer 

99 7 

Cusack. Heyman also attended.'' They discussed not only the management 

information system but also a market study that MEM proposed to perform for the 



EEC. 



Mansueto also had a meeting on March 25, 1969, with William Masiello and 



Senator James A. Kelly, Jr 



32 



Heyman apparently did not attend this 



26 Affidavit dated August 23, 1980, executed by Martin H. Heyman in Newton, 
Massachusetts, at 2. See also Heyman Sales Activity memorandum dated March 28, 
1969; Mansueto diaries for 3/25/69, 3/26/69; Mansueto testimony, P. A. 6/9/78 at 
68, 78-79. 

27 Heyman 8/23/80 affidavit, at 2. 

28 Mansueto testimony, P. A. 6/9/78 at 78. Heyman 3/28/69 Sales Activity 
memorandum. 

2? Mansueto testimony, P. A. 6/9/78 at 80. Mansueto pocket diary, 3/25/69. 

30 Heyman 3/28/69 Sales Activity memorandum. 

31 Heyman Sales Activity memorandum. 

32 Mansueto monthly calendar at 3/25/69; see Mansueto testimony, P. A. 6/9/78 
at 80. 



- 32 - 

meeting, * and it is not clear what the purpose of the meeting was. 

Martin Heyman continued to work on the management information system and 
market survey proposals. On March 26, 1969, Heyman met with Dr. Richard 



deNeufville of M.I.T. regarding the management information system 



35 



DeNeuf v i 1 1 e 



was A&F Commissioner Donald Dwight's consultant and adviser on the proposed 
management information system contract." On March 31, 1969, Heyman met with 
BBC engineer Cusack about the market study, and Heyman also met with BBC Director 
Chase about the management information system. 

Apparently, MBM concluded that it was making some progress in its efforts to 
obtain significant new business in Massachusetts, because on February 24, 1969, 
Mansueto had written in his diary: "Decision re: Boston space, etc. 

1 o 

(Thinking on it),"" and by April 1, 1969, Heyman's report reflected visits to 

39 
"many bldgs. for Eoston office w/agent." On April 28, 1969 Mansueto 

circulated a memorandum announcing that MBM had arranged to lease a small 



33 Heyman's sales activity memorandum does not mention a meeting with William 
Masiello or Senator Kelly. 

34 Mansueto testified that the meeting was probably related to "the continuing 
business of extending MBM's name in front of people." Mansueto testimony, P. A. 
6/9/76 at 60. 

35 Heyman 3/28/69 sales activity memorandum. 

3£ See letter dated May 6, 1969 from Dwight to MBTA construction chief James 
D. Fitzgerald; memorandum dated May 5, 1969 from Dwight to Deputy A&F 
Commissioner Charles E. Shepard. 

3 7 Memorandum from M[artin] Heyman to A[nthony] E. Mansueto, "Sales Report - 
thru A/5/69." 

36 Mansueto pocket diary for 2/2A/69. 
39 Heyman A/5/69 Sales Report. 



- 33 - 

L\ n 
office on Newbury Street in Boston as of May 1, 1569. 

On April 10, 1969 the EEC issued a formal request for proposals for the 
management information system. 1 Heyman's sales activity report indicates that 
two days later, on Saturday, April 12, 1969, Heyman had lunch with "Sam Flaksman, 
Secretary to Governor Sargent." In an interview with Commission staff, 
Heyman said that Flaksman was a relative of Heyman's mother's cousin and that the 
luncheon was purely social. Heyman stated that he listed the luncheon simply to 
make his report look more impressive and that Mansueto -- to whom Heyman sent the 
report -- never asked for any follow-up. Heyman did follow up with A&F 
Commissioner Dwight whom Heyman telephoned on April 14, 1969 regarding the 
management information system. 

Cn May 2, 1969, however, an objection was raised to the letting of a large 
contract for a management information system for the EEC. James D. Fitzgerald, a 

former chairman of the Department of Public Works who in 1969 was in charge of 

h 5 
construction for the Massachusetts Bay Transportation Authority, wrote a 

letter to A&F Commissioner Dwight calling the proposed BBC contract "a real waste 

of the taxpayers money...." Fitzgerald said that a management information system 

was already in use in other state agencies and that the proposed expenditure of 

$40,000 to $6C,00C "for just an outline of the work to be done" for the BBC was 



unnecessary 



A6 



AC Memorandum dated April 28, 1969 from Anthony E. Mansueto to G[erald] McKee, 
Jr. and nine others, re: "New Office - Boston." 

41 Bureau of Euilding Construction, Reauest for Proposals dated April 10, 
1969, for a study of "Automated] D[ata] Processing] implementation." 

42 Memorandum from Martin H. Heyman to Anthony E. Mansueto, entitled "Sales 
Activity Week of April 7 [1969]." 

43 Heyman 6/26/79 interview, at 17. 

44 Heyman "Sales Activity Week of April 7" memorandum. 

45 Memorandum dated May 5, 1969 from "DRD" [A&F Commissioner Donald R. Dwight] 
to "CES" [Deputy A&F Commissioner Charles E. Shepard]. 

46 Letter dated May 2, 1969 from James D. Fitzgerald to Donald Dwight, 
concerning a management information system for the EEC. 



- 34 - 

Dwight responded by letter dated May 6, 1969 in which he wrote that "the 
proposal for BBC represents a major step down from what the agency had originally 
proposed. " A7 Dwight, however, apparently did pass on Fitzgerald's comments to 
ceNeufville for evaluation, and the management information system contract 

A Q 

was eventually scaled down. 

It may be that the reduction of the management information system contract 
caused MBM to lose interest in it. In any event, MBM in the summer of 1969 
became interested in a vastly larger and more lucrative contract -- the contract 
to provide project management services for the new Boston campus of the 
University of Massachusetts. 



The Commonwealth's Decision to Use 
an Outsiae Project Management Firm 
on the UMass/Bcston Project 

In the spring of 1969, the University of Massachusetts was drafting proposed 

legislation for the appropriation and the procedures to govern the construction 

of its projected new campus in Boston. The idea of a Boston campus for the 

University of Massachusetts had originated at least as far back as the Peabody 

administration. Legislation had been passed and was signed into law by then 

Governor Feabody on June 18, 1964 authorizing a campus in, or in the vicinity of, 

Eoston, for the University of Massachusetts. Classes had started at a 

temporary site, the former Boston Gas building on Arlington Street, in the fall 

of 1965.' After several years of wrangling about the location of the 

permanent site for UMass/Boston , the UMass trustees finally bowed to the 

political realities in November 1968 and settled on a sanitary landfill 



kl Letter dated May 6, 1969 from Donald R. Dwight to James D. Fitzgerald. 

AS See id. and Dwight's 5/5/69 memorandum to Shepard, cited in n. 36, supra . 

A9 Memorandum of Approval #69-107 dated June 2, 1969 and sioned by Horace M. 
Chase, approved by Donald R. Dwight on June 4, 1969, awarded the contract for a 
systems and procedure study to Arcon at a fee not to exceed $9,750. 

50 Acts of 1964, c.562. 

51 Message dated August 6, 1969 from Acting Governor Francis W. Sargent, 
introducing H.5616. Journal of the House, August 1969. 



- 35 - 

52 

area at Columbia Point in Dorchester. A decision was reached to build the 

UMass/Boston campus in two phases. Phase I would encompass six buildings and 
site development, at a cost (including site acquisition) of $150 million. Phase 
II would follow, costing an additional $200 million. 

The pressure to build the UMass/Eoston campus as quickly as possible was 



intense 



The Arlington Street facilities were clearly inadeauate, 



54 



and 



the children born during the post-war "baby boom" were just reaching college 

age. Construction costs were rising rapidly, so that every month of delay was 

likely to result in hundreds of thousands of dollars of higher costs. 

UMass/Boston ' s Director of Planning and Development, Francis E. O'Erien, Jr., 

expressea the financial concerns in a memorandum dated June 9, 1969. Discussing 

the proposed budget of $150 million for the first phase of the campus 

construction, O'Erien wrote: 56 

"The $150,000,000 figure was based on the ability of the 
Commonwealth to move a large and complex project more rapidly 
than it has ever done before, following a design and 
construction schedule that would have the doors of phase 1 
buildings open in 1972. The usual design and construction 
schedule of the Commonwealth would place an opening date of 
phase 1 in 1975. The cost, following the 1975 open cate 
schedule, would be approximately $195,000,000. The higher 
cost is due solely to escalation of construction cost." 

O'Brien then complained that inadequate staffing of the BEC (which would handle 

the project) and of the university's own planning and development office would 



52 Loring Swaim, "Politics of 60 ' s the Backdrop for Development of Scandal," 
Lowell Sun, April 10, 1978. UMass internal memorandum dated February 24, 1978, 
entitled "Summary of [UMass] Board of Trustees Involvement with Supervision of 
Construction at UM/B," at 1. 

53 See , e.g. , letter dated July 18, 1969 from UMass Chancellor Francis L. 
Broderick to Board of Higher Education Chancellor Richard Millard. 

5A Swaim, "Folitics of 60's," supra n. 52. 

55 Eroderick 7/18/79 letter to Millard, supra n. 53. 

56 Memorandum dated June 9, 1969 from Francis E, O'Brien, Jr. to UMass/Boston 
Chancellor Francis L. Broderick, UMass Treasurer Kenneth w. Johnson, and Deputy 
A&F Commissioner Charles E. Shepard, re: "UMass/Boston: Columbia Point Site - 
Legislation. " 



- 36 - 

make the $195 million price tag -- rather than the $150 million total -- 

inevitable : 

"For the Commonwealth to save about $45,000,000 in 
capital outlay, it is necessary to staff the planning office 
of the University and the office cf the Eureau of Building 
Construction to move the project expeditiously. This has not 
been done. Reauests for increase in staff of the planning 
office have been cut by University administration and by the 
executive office of the Commonwealth; the Eureau of Building 
Construction does not have positions that may be assigned only 
to this project. 

"Given the shortage of staff situation, it is auite 
unlikely that the 1972~date and the $150,000,000 budget will 
be met. It is more likely that the 1975 date and the 
$195,000,000 will occur." 

On July 2, 1969, UMass President John W. Lederie wrote to UMass/Eoston 

Chancellor Francis L. Broderick, reporting that the UMass board of trustees had 

voted on June 30, 1969 to seek a capital outlay of $150 million for Phase I of 

UMass/Eoston. Lederie noted that the projected 1972 opening date involved an 

"extremely tight schedule" and added that "we are accepting a tremendous 

challenge to open at Columbia Point in 1972. If we get the support [of the 

Governor and Legislature for the $150 million appropriation] we must deliver." 

Lederie suggested that the best way to meet the tight schedule would be through 

additional staffing of the EEC, with a special commission as an alternative. 

Presumably, a special commission would have been structured on the order of the 

Government Center Commission (which had been responsible for many of the 

58 
buildings in the Government Center redevelopment), or, perhaps, on the model 

of the UMass Building Authority (which had built several buildings at UMass's 

Amherst campus but which was restricted, by law, to self-liauidating buildings 

such as dormitories and parking garages). 

On July 3, 1969, a wording change in the araft legislation was suggested 

which would have enabled the university to bypass the EEC and to avoid some of 

the delays that might be inherent in establishing a new special commission. In a 



57 Letter dated July 2, 1969, from UMass President John W. Lederie to 
Chancellor Francis L. Eroderick, confirming his understanding of the June 30, 
1969 trustee action. 

58 Acts of 1960, c.635. 
55 G.L. c.75 Appendix. 



- 37 - 

memorandum to UMass/Boston Chancellor Eroderick, planning director O'Erien 
proposea three additional paragraphs that "would permit the University to design, 
construct and equip the Columbia Point Campus without recourse to the Bureau of 
Building Const ruction . " ou The draft legislation would have empowered the UMass 
board of trustees directly -- without the EEC or any other agency acting as 
intermediary -- to hire the necessary architects, engineers, contractors, and 
consultants . 

It is not entirely clear how the university expected to manage the massive 
effort and to achieve the projected time and cost savings. The model of the 
UMass Building Authority, which had constructed some dormitories and other 
self-amortizing structures on its own, was not truly applicable, since it hao 
operated on a much smaller scale than that proposed for the UMass/Boston 
campus. 61 Nor does it appear that planning director C'Brien had any thought, 
as of July 1965, of engaging a professional project management firm to oversee 
the work. 6z Rather, it seems that O'Brien felt that the mere absence of 
BBC-imposed bureaucratic delays ana "red tape," coupled with the hiring of a 
few professionals from appropriate disciplines, ' would suffice. (Indeed, even 
after the project was well underway, O'Erien repeatedly expressed the view that 
the university could have managed the project itself, at far less expense 



60 Memorandum dated July 3, 1969 from "Frank" [Francis E.] O'Erien [,Jr.] to 
Chancellor F[rancis L.] Broderick, "Subject: U. Mass. Columbia Point Campus 
Legislation." 

61 The largest project undertaken by the UMass/Euilding Authority as of 1969 
was the main buildino of the Campus Center in Amherst with a total project cost 
of $11,593,945. Table of UMass Building Authority buildings, prepared by Special 
Commission staff. By contrast, the UMass/Eoston campus, with a first phase 
costing $150 million and additional phases projected to cost more than $200 
million more, was to be the largest project ever undertaken by the 
Commonwealth. Swaim, "Politics of 60's," supra n. 52. 

62 See O'Brien 7/3/69 memorandum to Broderick. 

63 Notes of 5/15/79 interview of Francis E. O'Erien, Jr. by Special Commission 
staff , at 6 . 

64 Notes of 6/13/80 interview of Francis E. O'Erien, Jr. by Special Commission 
staff, at 2. 



- 38 - 

than the multi-million dollar fee paid to MEM,.) 65 University officials tried 
to persuade government officials that the BBC, as then constituted, was incapable 
of handling the job with the necessary speed 66 and that the solution was either 
to enlarge the BBC staff or, preferably, to turn the job over to the 



university 



67 



On August 6, 1565, Acting Governor Sargent filed an appropriation bill for 



the UMass/Boston project 



68 



Rather than seeking the full $150 million which 

65 



the university felt was necessary for Phase I of the project, Sargent 
decided to ask only for $50 million to cover "the initial stages of construction 
of the first phase" of UMass/Boston . 70 

The bill introduced by the Governor did not adopt the language which would 
have permitted the university to oversee the entire project itself. On the other 
hand, it did attempt to respond to the concern that the EEC could not, without 



6 - See e.g. , memorandum dated January 15, 1571, from Frank O'Brien to James 
Cusack, "Subject: Columbia Point/Schedule of Building Completion Dates," at 2; 
memorandum dated April 3, 1572, from O'Brien to [Deputy A&F] Commissioner [Albert 
H. ] Zabriskie , at 1 , 5. 



66 



Eroderick 7/18/65 letter to Millard, supra n. 53, at 1 



67 Id . See also letter dated July 25, 1565 frcm Chancellor Francis L. 
Eroderick to Governor Francis W. Sargent. 

66 Message dated August 6, 1565 from Acting Governor Francis W. Sargent, 
introducing H.5616 of 1565, supra n. 51. 



65 



Eroderick 7/18/65 letter to Millard supra n. 53, at 2 



7C Governor's Message accompanying H. 5616 (Aug. 1565), supra n. 51, at 2. It 
may be that the decision to seek only $50 million reflected some degree of 
agreement with concerns expressed in a letter dated June 6, 1565 from the 
Massachusetts Finance Advisory Board to Sargent and to the Ways & Means Committee 
chairmen. In that letter, the board members insisted that the Commonwealth's 
large borrowings were "courting financial disaster." Specific mention was made 
of the $150 million sought for UMass/Boston. Although the Governor sought, and 
the legislature appropriated, only $50 million in 1565, an additional 
appropriation of $80 million was made the following year. 



- 39 - 

augmentation, handle the project expeditiously. The language proposed 
by"the Governor in section 8 of the bill was as follows: 

"The executive office for administration and finance 
shall establish in the bureau of building construction a 
special unit to be assigned exclusively to the planning, 
development and supervision of construction of the University 
of Massachusetts campus as authorized by this act. The 
director of building construction may, with the approval of 
the commissioner of administration, temporarily assign any 
permanent or temporary employee of said bureau or may employ 
such additional professional engineers as may be reauired for 
the supervision of the project; provided, that the salaries 
and expenses of all such employees during the period of such 
assignment shall be paid from funds made available by this 
act, "as a part of the cost of the development and construction 
of the project. No increase in the number of permanent 
positions in said bureau shall be allowed on account of this 
act." 

In other words, a special EBC unit would be recuired to be set up to expedite the 

UMass/Boston project, but it would have to be staffed either with present EPC 

employees or by hiring new personnel on a temporary basis. Since the EEC's staff 

at that time was already far behind in supervising existing projects, and 

since this proposed legislation would not permit the BBC to increase its 

permanent staff, the bill would obviously leave only one sensible strategy open 

to the BEC: to use as few permanent employees as possible en the UMass/Boston 

project, with the rest of the special unit's staff coming from temporary hirings 

of new personnel. The bill permitted outside consultants to be hired, provided 

that the A&F Commissioner approved their fees. z 

It is not clear who made the decisions (a) to reject the university's 

suggestion that the university itself manage the project; and (b) to prevent the 

BEC from expanding its permanent staff in order to handle the UMass/Bcston 

project, which was the largest project ever undertaken by the Commonwealth as 



71 p,A. Report at 13. See also minutes of June 30, 1969 meeting of UMass 
board of trustees, cited in 2/24/78 Summary of Board of Trustees Involvement, 
supra n . 52 . 

72 H.5616, App. A, section 9, supra n. 51. 



- 40 - 

well as a project where time was of the essence. Nor is it clear why these 
decisions were made. 

The Sargent-filed bill was passed by the Legislature on August 24, 1969. The 
provisions about the special EBC unit and the use of consultants were passed 
almost exactly as Sargent had proposed. ^ Governor Sargent signed the bill 
into law on August 29, 1969. 7A 

Although the UMass/Boston appropriation bill encouraged the BBC to use 
outsiders to help coordinate and supervise the UMass/Eoston project, the BBC 
could have chosen to hire individuals from various specialities rather than to 
hire a single project management firm. Exactly how, when, and by whom the 
decision was made to use an outside firm is not entirely clear. 

Walter J. Foitrast, then the Acting BEC Director, has testified that he 
decideo to use outsiders because he wanted to divert as little EEC manpower as 
possible from other projects. Poitrast said that the idea to use a single 
cutside firm was either suggested to him by UMass/Boston planning director 
O'Brien or arrived at jointly during discusssions between Poitrast and 



C ' Erien 



76 



72 The only chanae was the deletion of the explicit permission for the BBC 
director to employ "additional professional engineers." It is not clear why that 
language was removed. 

7A Acts of 1969, c.898 at 961-962. 

75 Testimony of Walter J. Poitrast, P. A. 3/7/78 at 7-8. 

76 id. at 8-9. 



- 41 - 

Although O'Brien has not testified on that subject, there is documentation 

from 1565 that appears to corroborate Poitrast's recollection. Cn August 29, 

1965 -- the day on which Acting Governor Sargent signed the UMass/Boston 

appropriation bill -- O'Erien wrote to Poitrast (in a letter directed to the 

attention of BBC employee Joseph Surette) urging that a "coordinating designer" 

be hired "to assure coordination of design of site and buildings, to handle 

consultant contracts such as those for borings which all designers will need, and 

to keep design and construction on schedule and within the overall 

budget...." 77 O'Brien appended a suggested Pequest For Proposals ("RFP"). 

That document called for wide-ranging services involving many different 

disciplines : 

"General site development of campus site of approximately 7C 
acres. Consists of excavation & rough fill, all utility 
mains, main entry road, service and construction roads, 
general topographic survey and soil boring data. 

"Phase I of the campus consists of six buildings with 
ancillary facilities.... Coordination for all University-wide 
circulation, services and facilities will be reauired. Also 
required will be supervision and coordination of work 
progress...." 

78 
For these multifarious services, O'Brien listed an "estimated construction 

cost" of $14, 290, GOO and a total "appropriation allocation" of $15,400,000. 

G'Brien's draft was adopted by the Designer Selection Board and incorporated 

79 
verbatim into the DSB's Request For Proposals issued on September 23, 1969. 



77 Letter dated August 29, 1969 from Francis E. O'Brien, Jr. to BBC 
Director Walter J. Poitrast (to the attention of Joseph Surette). 



78 

done 

MEM 

cont 

neve 

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desi 

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sale 

Hard 

P. A. 

test 



The s 

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imony 



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ervices 
ever e 
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as exc 
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conceiv 
e sugge 
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/80 at 



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thing that MBM had ever 
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ighly unlikely, 
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s as a result of 
Heyman's rival, MCM 
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also 



Heyman testimony, 
6/26/8CT at 36-37; Harding 



79 



See discussion at text accompanying notes 95-96, infra 



- 42 - 

MEM's Initial Awareness of the Potential 

UMass/Eoston Project Management Contract 

It appears that MBM first heard about the potential UMass/Eoston project 
management contract late in August of 1969, at a time when the appropriation bill 

either had just been passed by the Legislature or was about to be passed by the 

80 
Legislature. This conclusion results from two considerations: (1) documents 

written by Heyman in 1969, and (2) the lack of any documentary references -- 

either in Mansueto's diaries, Heyman's reports, or elsewhere -- indicating 

earlier awareness by anyone from MBM of a potential project management contract 

for UMass/Eoston . 

The first mention of the UMass/Eoston project contained in any MEM document 

available to the Commission appears in an "InQuiry Notice and Contact Report" 

dated August 27, 1969 ana filed by Martin Heyman. Heyman submitted such reports 

to Mansueto in order to alert the MBM "home office" in New York of significant 

p i 

new contracts that Heyman had learned about and decided to pursue. Heyman 

usually submitted such a report when he made the first contact in reference to a 

significant contract; follow-up reporting normally was done by less formal 

P c 

means . 

The August 27, 1969 report reflected a meeting at Eoston's City Hall with 
David Weiner, then the assistant director of operations and public services for 
the Boston Redevelopment Authority ("ERA"). Although the purpose of Heyman's 
meeting with Weiner apparently was to discuss services that MEM could provide for 
the BRA, Heyman noted that Weiner "will call Frank O'Brien -- head of planning at 
UMass Boston -- for mtg on Columbia Ft. Project." 

On September 8, 1969 Heyman met with O'Brien and with O'Brien's assistant, 



80 MBM Vice President Anthony Mansueto recalled having heard about the 
potential UMass/Eoston project management contract as early as the spring of 1969 
(Mansueto testimony, 5 M/M 2/16/79 at 97-98); but his memory appears incorrect, 
for the reasons discussed in this section. 

el Id. at 152-155. 

82 Id. at 155. 

82 Inquiry Notice and Contact Report dated August 27, 1969, initialed M.H.H. 
[Martin H. Heyman]. 



- A3 - 
Willard W. Prince. Heyman sent an Inquiry Notice and Contact Report about 

this meeting to Mansueto. The wording of the report suggests that Heyman had not 

a 5 
previously filed such a report about the UMass/Boston project. In the 

September 8, 1969 report, Heyman wrote: 

"[The] Legislature in providing funds [for the UMass/Boston 
project] stipulated that: (1) project must come under supervision 
of EBC + (2) that BBC must set aside personnel to work on this 
project only, that they may utilize temp, personnel and utilize 
outside services. 

"UMass would prefer direct control of the prcject. Failing that, 
they have requested the BBC to issue RFP's for architects for 
the] six bldgs. in Ph[ase] I plus coordinating 
arch[ itect ]/eng[ ineer] who will design site utilities, civil, 
review arch[ itect ]* s concepts + tie together, and utilize 
scheduling, cost control, etc. during design + construction." 

In his report, Heyman also explained the possible fee: "Phase I allocation 

for coordinating and control eng/arch is 15.3 M [of which the] estimated 

construction value to be designed [is] 14.2 M [leaving a] fee remaining [of] 

1.1M for Phase I." This relates two numbers contained in the suggested RFP 

that O'Erien had sent to Foitrast and Surette of the BBC on August 29, 1969. 

O'Brien had listed an "appropriation allocation" of $15,400,000 and an 

"estimated construction cost" of $14 , 290 , 000 . 86 After discussing the 

UMass/Boston project with O'Brien, Heyman understood the fee for the project 

management work, as such, to be approximately $1,110,000 ( i.e. , the difference 

between $15,400,000 and $14,290,000); the site development and other related 

work would consume the other $14 , 290 , 000 . 87 



8Z * Inquiry notice and contact report dated September 8, 1969, initialed M.H.H. 
[Martin H. Heyman], marked "To: A.E.M. [Anthony E. Mansueto]." 

85 Heyman testified to the Post Audit Subcommittee that he "ha[d] a feeling 
that there was probably an earlier [report]" that he filed about the UMass/Eoston 
project. Heyman testimony, P. A. 3/22/78 at 155. He gave no reason for that 
"feeling", and perhaps he was thinking about the report he had filed about his 
meeting with Weiner -- which was not made available to the Post Audit 
Subcommittee, so far as the Commission can determine. Also, despite Heyman's 
testimony to the Post Audit Subcommittee (Heyman testimony, P. A. 3/6/78 at 5-6) 
that he had many meetings with O'Brien and Prince before the formal RFP was 
issued on September 23, 1969, O'Erien and Prince remember only this meeting with 
Heyman. Notes of 6/13/80 interview of Francis E. O'Brien, Jr. by Special 
Commission staff, at 3. Notes of 5/6/79 interview of Willard W. Prince by 
Special Commission staff, at 3. 

86 O'Brien 8/29/69 letter to Poitrast supra n. 77. 

87 Heyman 8/21/80 interview. 



- 44 - 

Thus, UMass/Boston was seeking a "coordinating architect /pro ject manager" -- 
which it felt could be a single firm -- yet MEM was aualified at most for the 
much smaller part of the total contract. ° Unless the "coordinating 
architect/project manager" contract were to be divided into two separate 
contracts, therefore, MBM would presumably have been ineligible to bid for it on 
its own. 

There was, however, a way in which MBM could submit a bid for the project 
management work, even if the contract were not split into two parts: by 
participating in a joint venture with a firm which was capable of doing the 
design, engineering, and contracting for the site development, while MBM could do 
the project management. MBM had participated in a joint venture in Thailand with 
an architectural/engineering firm named Seelye Stevenson Value & Knecht 

Q C 

("SSVK"), and Heyman suggested a similar joint venture for the UMass/Boston 
project. In his September 8, 1969 report to Mansueto, Heyman wrote, in the space 
for "follow up or action to be taken," that a "mtg. will be scheduled with Walter 
Foitrast cf EBC to determine if RFP will be sent. If so will he entertain a 
proposal from us. Presumably MBM/SSVK J/V [joint venture]." 



Issuance of the Formal 

Reouest for Proposals 

by the Designer Selection Board 

MBM salesman Heyman met with Acting BBC Director Walter Poitrast on 

on 

September 18, 1969. According to Heyman's written report of the meeting, the 

"project(s) discussed" were: 

"Use of a more formal estimating procedure for archts under 
BEC commissions with special emphasis on UMass Columbia Point 
as a pilot program. He likes the IBA approach. 

"Briefly discussed Phase II of the ADF program which we bid in 
the spring. He says we are still considered." 



88 _I_d. See also n. 78, supra . 

89 McKee testimony, Sp. Comm. 6/26/80 at 134-135. 

90 Inquiry Notice and Contact Report dated September 18, 1969, initialed 
M.H.H. [Martin H. Heyman]; see letter dated September 24, 1969 from Martin H. 
Heyman to Francis E. O'Erien, Jr., concerning project management. 



- 45 



Heyman noted that MEM was currently doing work for the BBC 9 ^ and that Poitrast 
"says he likes to use outside consultants (unlike his predecessor)." Although 
Heyman expressed "doubt [that Poitrast] will make many innovative moves until he 
becomes permanent director [of the BBC]," Heyman wrote that "we [MBM] will submit 
cualif ications to the Designer Selection Board by Cct. 7 for program [ sic ] 
management services on UMass (Columbia Point)." 

A project management firm apparently could have been chosen for UMass/Boston 
without the participation of the DSE. Poitrast testified to the Post Audit 

Subcommittee in 1978 that he could have made a selection (for ratification by the 

9 T 

A&F Commissioner) without seeking the guidance of the DSE. Poitrast said, 

however, that he chose to utilize the DSB because "it was a large contract, a 
large responsibility, [and] I had decided that it should go through the 
Design[er] Selection Eoard in order to use the expertise of the Eoard in helping 
me select ... three firms." 

On September 23, 1969 the DSB issued a formal RFP for "coordination and 
administration of Phase I of new campus, engineering design and limited 

architectural design, bid plans and specifications, and supervision of 

9 ^ 
construction." The description of the scope of work was verbatim what Frank 

O'Erien of the UMass/Eoston planning office had suggested on August 29, 

1969. 56 The DSB stated that it had not preaualified the category of designer 

that might be considered for the project, and it added that it was reserving its 

statutory right to recommend to the A&F Commissioner that the contract be 

subdivided between a project management firm and an architectural/engineering 

firm. 



51 Heyman 9/18/69 inquiry notice and contact report. 

92 P. A. Report, at 15. 

93 Poitrast testimony, P. A. 3/21/78 at 9. 

54 id. 

55 Cesianer Selection Board List Number 70-1 Item 20, public notice dated 
September 23, 1969, at 1. 

96 O'Erien 8/29/69 letter to Poitrast. 



- 46 



97 



The RFP called for applications to be received by October 7, 1969, 

The day after the RFP was issued, MBM salesman Heyman wrote to Frank O'Brien 
of UMass/Boston thanking O'Erien for the ' Brien-Prince-Heyman meeting earlier in 
the month and expressing MEM's intention to submit a proposal for the 

C Q 

UMass/Eoston management contract. 

MEM, along with approximately fifty (50) other firms, submitted a 
proposal before the October 7, 1969 deadline. On October 8, 1969 the DSE decided 
to exercise its option to split the contract into two contracts -- one for 
project management, and the other for site development. The site 
development contract -- by far the larger of the two -- was awarded on October 
27, 1969 to Charles T. Main, Inc. The Commission has not looked into that 
contract, and it will not be considered further in this report. 



97 DSE List Number 70-1 Item 20, supra n. 95. 

98 Heyman 9/24/69 letter to O'Brien supra n. 90. 

95 List of firms responding to Project U67-4 #2, Item 20, prepared for 
Designer Selection Eoard Meeting of October 15, 1969. 

100 see minutes of UMass/Boston Planning and Development Committee meeting of 
OctobiTr - 10, 1969, at 1, containing a report about the October 8, 1969 DSB 
meeting. (Minutes of the DSB's 65th regular meeting of October 8, 1969 did not 
record this decision.) 

101 Letter dated October 27, 1969 from Donald R. Dwight to Walter Poitrast, 
concerning the appointment of certain designers. 



47 



MBM's Decision to 

Have Former Governor 

Endicott Peabody Assist 

in MBM's Efforts to 

Obtain tne UMass/Boston Contract 

The UMass/Boston project management contract was extraordinarily attractive 
to MBM. In addition to the large fee, M8M was interested in the visibility ana 
orestiqe l : kely to result from winning this first major project management 
contract to be awarded by any governmental agency in the United States. iU "2 

MBM's officers recognized that certain realities had to be confronted if MBM 
were to have any realistic chance of winning the UMass/Boston contract. First, 
although MBM had opened a small office on Newbury Street in Boston, MBM still was 
basically a New York company. It recognized that preference mignt well oe given 
to Massachusetts firms or firms oerceived as having permanent and substantial 
stakes in Massachusetts.^- 5 Second, although MBM may have been one of tne 
first firms to conceive of linking various services into a single package of 
"proiect management services, "104 MBM did not have much of a track record in 
providing the full panoply of comprehensive project management services on a 
single proiect.- 05 In fact, McKee has testified that "no one had" offered tne 
entire oackaae o f services on a single project before the Columbia Point 
Dro ; ect . 1° 6 Moreover. MBM was not equipped to handle the UMass/Boston project 
with its present staff: it would have to hire most of the employees that would oe 
necessary if it won the job.- ^ Finally, MBM was aware of tne political tinge 



102 McKee testimony. So. Comm. 6/26/80 at 8. 

103 Heyman testimony, P. A. 3/6/78 at 24-25. 

104 McKee testimony, P. A. 3/22/78 at 11-17. During McKee's testimony before 
the Special Commission, Commissioner Walter J. McCarthy suggested that project 
manaaement was already widely used in the private sector as of 1969. See S p . 
Cornm" 6/26/80 at 26-30. 

105 Mansueto testimony, P. A. 5/23/78 at 34. 

106 McKee testimony, 6 DiC 2/1/77 at 80-81. 

107 See MBM oersonnel listing, corporate headquarters and New YorK office, 
dated November 10, 1969: BBC memorandum dated December 17, 1969 from Edmund 
McAdam to 0esign[er] Selection Board, concerning tne selection of a project 
manaaement consultant for UMass/Boston, at 2. 



48 
to contract awarding in Massachusetts. Frank Masiello had discussed the 
political realities with Mansueto and made the necessary political introductions 
for Mansueto during both the Peabody administration and the Volpe 
admin ist rat ion . 108 g u t although Mansueto had been introduced to Albert 
Manzi,109 and although Manzi had been a power in the Volpe administration , HO 
Manzi's oosition may have been viewed as somewhat tenuous in mia-1969, since 
Acting Governor Sargent was replacing many of Volpe's Key people with individuals 
closer to Sargent. H 

MBM's disadvantages of (a) being from Ne/v York, (b) being small and 
relatively inexperienced in the field, and (c) not clearly having top-level 
political connections to the Sargent administration were accentuated because of 
the nature of the UMass/Boston project management contract. Here */as a contract 
in a field that was so newH-2 that even the Designer Selection Board was 
unclear about the nature of the services reguired, as indicated in the DSB's 
ill-defined Request For Proposals. 1^ The contract promised to De extremely 
lucrative, and there was virtually no upper limit on its potential size: it was 
not an "architectural" contract, so the statutory table of fees for architects 
did not apDlv,H4 nor was it a general -contractor-type "construction" contract, 
so the "lowest responsible bidder" law was not applicable . H^ Moreover, tnere 
were no established criteria by which performance under the contract by the 
winning firm would be measured; it would be responsibility of the architects, 



108 See discussion in Chapter III, supra . 

109 Id. 

110 Id_. See also the section on A New Campus for Holyoke Community College, 
elsewhere in this Final Report. 

111 Notes of 1/6/80 interview of M. Joseph Stacey by Special Commission staff, 
at tx. 

112 McKee testimonv, 7 OiC 2/2/77 at 30, 40. 

113 See discussion supra . 

1U Testimony of Walter J. Poitrast, P. A. 2/15/78 at 122-123. 
115 G. L. c . 149 s. 44A. 



49 
engineers, and contractors to design and build the university so that it 
Functioned adequately, 116 and the only clearly defined assignment for the 
project manager 117 would be to assist in meeting a schedule that virtually 
everyone agreed was unattainable 11 ^ -- and for which there would be no penalty 
;o the project manager if it were not met. 11 ^ In sum, if there were ever a 
:ontract that could be awarded and even have its fee set on a purely 
jiscretionarv basis, this was it. 

It was in this context that MBM engaged former Governor Endicott Peabody to 
issist in MBM ' s efforts to win the UMass/Boston project management contract. 
3 eabodv knew both Acting Governor Sargent and A&F Commissioner Donald Dwight, 
laving appointed both to be Commissioners of the Department of Public Works in 
L964. 1 20 He also knew officials at the University of Massachusetts and at the 
3BC," the agencies whose votes would be most powerful on tne Designer 
Selection Board -- the hurdle that would have to be cleared in order for a firm 
:o be among those eligible to be selected by A&F Commissioner Dwight. 
It is not completely clear just how MBM and Peabody actually came together in 
1969. Frank Masiello told the Commission that he remembered hearing from Peabody 
in earlv 1969 that Peabody was representing MBM. ^2 Masiello aated tne 
:onversation by reference to Masiello's retaining Peabody for an unrelated matter 
in February 1969. ^3 Masiello recalled the conversation as occurring in 
r ebruary or earlv March 1969 during lunch following a meeting in Peabody's 
Washington office. 1 ^ 



116 McKee testimony, Sp. Comm. 6/26/80 at 4-6. 

117 Id. at 5. 

118 Poitrast testimony, P. A. 2/15/78 at 113-116. 

119 id. at 114. 

120 Sarqent testimony, P. A. 6/7/78 at 53-54; Testimony of Donald R. Dwight, 

P. A. 3/15/78 at 5-7; Testimony of Endicott Peabody, 8 DiC 2/3/77 at 60; Sp . Comm. 
6/19/80. at 101. 

121 Peabody testimony, Sp. Comm. 6/19/80 at 9-13. 

122 Notes of 2/7/80 interview of Frank R. Masiello by Special Commission 
staff, at 11. 

123 Id. at 10-11. Peabody testimony, Sp. Comm. 6/19/80 at 21-22. 

124 Frank Masiello 2/7/80 interview, at 11-12. 



50 

However, the earliest MBM document available to the Commission making 
reference to the Peabody law firm is a memorandum from Anthony Mansueto to Gerald 
McKee. dated Julv 1, 1969. 125 In the memo, Mansueto related a telephone 
conversation he had had that morning with Jeremiah Lambert. Lamoert was a 
Washington. D.C. lawyer whom MBM had engaged in 1968 to help MBM in regard to 
federal contracts . 126 Mansueto reported that Lambert was considering joining 
the law firm of "Peaoody (former Governor of Massachusetts)" out that Lamoert 
"did not know whether he would join this office and would not know for three or 
p our weeks." There was no indication in Mansueto's memo whether MBM had already 
retained or was planning to retain Peabody personally if Lambert did not join 
Peabodv ' s f ; cm. 

On Julv 17, 1969, Lambert wrote directly to McKee that "[it] now seems very 

likely [that] I [will] join the Peabody firm.... I would expect that I will join 

my new firm by August 18, [1969]. "127 Finally, on August 20, 1969, Lamoert 

wrote a letter to McKeel28 which said, in part: 

"As Tony [Mansueto] and I discussed today, I have completed 
arrangements for joining mv new law firm, which will be known 
as Peabody, Rivlin, Kelly, Cladouhos and Lambert. I expect to 
join the firm officially as of September 1.... 

"I also mentioned to Tony that Endicott Peabody might be of 
great help to MBM, particularly in Massachusetts and with 
regard to federal government matters. I would very much hope 
that. ..we can continue our relationship after I join my new 
firm. " 

Lambert did join Peabody's firm on September 1, 1969.129 Approximately 

three weeks later, MBM learned that Massachusetts had definitely decided to use 

an outside Droject management firm, at a substantial fee, in connection with the 

UMass/Boston project. Peabody began working actively to try to help MBM win the 

UMass/Boston contract about one week after that. 



125 Memorandum dated July 1, 1969 from Anthony E. Mansueto to Gterald] McKee, 
[Jr.] re: "Telephone conversation with Jerry Lambert." 

126 Testimony of Jeremiah D. Lambert, Sp. Comm. 6/18/80 at 7-9. 

127 Letter dated July 17, 1969 from Jeremiah D. Lambert to Gerald McKee, [Jr.] 

128 Letter dated August 20, 1969 from Jeremiah D. Lambert to Gerald McKee, Jr. 

129 Peabody testimony, P. A. 3/7/78 at 98. 



51 

The Fee Arrangement 

b etween MBM and the Peabody Firm 

Contemporaneous documents-'- - 50 - and testimony of Jeremiah Lambert-^! 
indicate that MBM's initial agreement with the Peabody law firm (effective 
September 1, 19691 called for MBM to pay a retainer of $800 per month, plus 
reimbursement of out-of-pocket expenses ( e.g . , travel, postage, photocopying) 
incurred on MBM's behalf by the Peabody firm. This was a continuation of the fee 
arrangement that had existed between MBM and Lambert's prior firm. 132 

A special fee agreement was superimposed on top of the $800 monthly retainer, 
however, to compensate the Peabody firm for assistance in regard to the 
UMass/Boston contract. Although MBM continued to pay a monthly retainer, MBM 
also agreed to pay to the Peabody firm a percentage of wnatever MBM ultimately 
received f rom the Commonwealth on the UMass/Boston contract. 133 Pursuant to 
that agreement, MBM paid $22,500 to the Peabody firm for help in obtaining the 
UMass/Boston contract for MBM. 134 

The precise fee arrangement between MBM and the Peabody firm was a suoject 
that the Post Audit $ubcommittee considered impprtant and was unable to 
resolve. 1^5 since the matter has significant ramifications, the Commission 
continued the inquirv that the Post Audit Subcommittee had begun into the 
matter. Rather than interrupt the present narrative relating to MBM's 
acquisition of the UMass/Boston contract, the detailed discussion of the evidence 
relating to the Peabody ' s firm's fee is not contained here bur. instead will oe 
found in Appendix A following this Final Report on MBM. 



130 Statements dated September 30, 1969, October 31, 1969, November 25, 1969, 
December 26, 1969 from the Peabody law firm to MBM; memorandum dated Decemoer 26, 
1969 from Jeremiah D. Lambert to "Jack" [presumably MBM comptroller Jack 
Lifschitz]. 

131 Testimony of Jeremiah D. Lambert, Sp. Comm. 6/18/80 at 25-28. 

132 Id. at 25-26. 

133 Memorandum dated February 17, 1970 from "Gov. Peabody" to "Mr. Lambert," 
re: "MBM Fee - University of Massachusetts." 

134 Letter dated June 7, 1978 from Jeremiah D. Lambert to Charles R. Nesson. 

135 See , e.g. , letter dated June 6, 1978 from Charles R. Nesson [counsel to 
the Post Audit Subcommittee] to Morris Goldings [counsel to Peabody-Lamoert ] . 



52 

The October 1, 1969 Meeting of 
Peabody and MBM's Officers Regarding 
the UMass/Boston Contract 

The first meeting of Endicott Peabody with MBM officials regarding the 
UMass/Boston contract apparently took place on October 1, 1969 -- one weeK after 
the Designer Selection Board issued the Request for Proposals. The Peabody-MBM 
meeting took place in New York and was attended by Peabody, Lambert, McKee , and 
Mansueto . - 36 

McKee described for Peabody the types of work that MBM had done in the past 
and was hooing to do in the future. With that background, McKee explained the 
significance of the proposed UMass/Boston project management contract and the 
opportunity it could represent for MBM. -37 McKee then expressed his concern 
that the contract might not be awarded solely on the merits. McKee feared that 
MBM might be at a disadvantage because MBM was not well Known in 
Massachusetts.^ 8 Accordingly, McKee asked Peabody, a former Governor of 
Massachusetts, to speak to people involved with the contract award process to 
insure that MBM's application would be taken seriously .- 39 

Peabody knew, according to his own testimony, that a firm seeking a state 
contract in Massachusetts could enhance its chances by making or pledging to make 
significant "contributions" to Doliticians in power. 1A0 This was, in Peabody's 
view, perfectly proper and even commendable. But Peabody testified to tne 
Commission that he did not discuss this with MBM in 1969 because 1969 was not a 
Gubernatorial election year. I* 12 



136 Peabody testimony, P. A. 3/7/78 at 98. 

137 Id. at 98-101. 

138 Id. at 100-101. 

139 Peabody testimony, Sp. Comm. 6/19/80 at 26; P. A. 3/7/78 at 101 

140 Peabodv testimony, Sp. Comm. 6/19/80 at 10-14. 
Ul Id. at 10-11. 

142 Id. at 154-156. 



53 

In anv event, Peabody agreed to help MBM in its attempt to win the 

UMass/Boston contract. 1^3 On October 2, 1969 -- the day after the New Yotk 

session -- Peabody met in Boston with people associated witn UMass and with 
officials of the state Bureau of Building Construction ("BBC"). To put those 

meetings into oerspective, it may be helpful first to consider the roles of UMass 
and the BBC in the contract award process. 

The Formal Procedure by Which 

the UMass/Boston Project Management 

C ontract Was to Be Awarded 

State building-related contracts in Massachusetts were awarded by three 

different procedures in 1969, with the type of contract determining the procedure 

applied: (1) For architectural contracts, competing firms were screened by the 

state's Designer Selection Board ("DSB") which then chose three finalists and 

forwarded those firms' names to the Commissioner of Administration & Finance 

f"A&F"l who selected the winner. 144 The winning architect's fee was normally 

set bv the rather mechanical process of consulting a statutorily mandated fee 

schedu ] e which determined the amount of the fee based upon the type and estimated 

construction cost of the building. (2) For construction contracts, a "lowest 

resoons'ble bidder" system was used. The detailed plans ana specifications 

prepared by the architects were made available to interested contractors who then 

submitted bids. Whichever gualified contractor submitted the lowest bid received 

the contract. 1^5 (3) Engineers and other consultants were generally selected by 



143 Peabody testimony, P. A. 3/7/78 at 101; Sp. Comm. 6/19/80 at 24 

H4 G.L. c. 7 s. 30B. 

145 G.L. c. 149 s . 44A. 



the BBC, often upon the architects' recommendation. Their fees were negotiated 
and had to be aoproved by the A&F Commissioner. 146 

Massachusetts had never used project management on a state building project 
as of 1969. Thus, there may have been some doubt about which contract-awarding 
procedure was aoprooriate for the UMass/Boston project management contract. 
Although the BBC apparently could have awarded the contract directly as a 
consulting contract, 1 - 47 Acting BBC Director Walter J. Poitrast did not make the 
selection himself. Instead, the DSB-A&F procedure established for architect 
selection was used. 148 Thus, the choice of the UMass/Boston project manager 
was made directly by A&F Commissioner Donald R. Dwight from among three finalists 
designated bv the DSB. 

The Designer Selection Board in 1969 involved seven participants. The 
Governor appointed five members, of whom two had to be architects and two 
engineers. A sixth participant was the BBC Director who served ex officio and 
had a vote. The seventh spot was more fluid, being filled in regard to any 
particular contract bv a representative from the "user agency" for the contract 
in guestion -- i.e. , the agency for which the project was to be built. 149 
After the DSB was orovided with a contract description by the BBC, it would 
advertise the contract bv means of a Reguest for Proposals ("RFP"), attempt -- 
without anv staff or budget -- to screen the applicants, and then select three 
finalists. 

Although the seven DSB participants had egual voting power, 150 they normally 



146 G.L. C.29 S.29A. 

147 Poitrast testimony, P. A. 3/21/78 at 9, 
U8 _Ip\ 

149 G.L. c. 7 s . 30B. 

150 Id. 



55 

did not have equal interest or information. The user agency and the BBC would 
have to work with the contract winners and live with the buildings produced. 
Accordingly, the user agency and the BBC often took it upon themselves to gather 
information about the firms applying for contracts. Since the other DSB members 
had no direct stake in the projects and had no support staff to develop detailed 
indeoendent data, they normally voted to include at least the first choice of the 
B8C and the first choice of the user agency among the three finalists. Indeed, 
this was virtually always their practice. 151 

Thus the two votes that really "mattered" on the DSB were those of (1) the 
use r agencv -- in this case the University of Massachusetts -- and (2) the BBC. 
And the DSB "hurdle" had to be surmounted if a firm were to have a chance of 
being selected by the A&F Commissioner. 

These facts oresented problems for MBM, since MBM was not in a particularly 
strong position with either the BBC or the University of Massachusetts. MBM nad 
received only a few small cost-estimating contracts through the BBC. 152 
Moreover, the only BBC official who had been cultivated to any degree by M8M (via 
Mansueto"! was James Cusackl53 and, although it had oeen widely expected that 
Cusack would become BBC Director, 154 he had recently lost out to Walter 



151 See P. A. Reoort, at 16. 

152 See "Partial List of MBM Contracts in Massachusetts - Public & Private 
1964-1969," prepared by Commission Staff from MBM job cards, introduced as McKee 
Exhibit 2A, Sp. Comm. 6/26/80 at 21. 

153 See discussion in Chapter III, supra . 

154 Id. 



56 
Poitrast. 155 To make matters even worse for MBM in this regard, Poitrast was 
bitter that Frank Masiello had supported Cusack for BBC Director, 156 anc ] Frank 
Masiello was well known at the BBC as MBM's earlv sponsor. 157 a s f or uMass, 
MBM aooarently had not done any prior work for UMass (not even on the Amherst 
campus" 1 , and when MBM salesman Martin Heyman met on September 8, 1969 with UMass 
planning officials Franc's O'Brien and Willard Prince, they simply referred 
Heyman to the BBC. 153 

Fortunately for MBM, Endicott Peabody knew officials at both the BBC and the 
University of Massachusetts, since Peabody had dealt with both institutions when 
Peabody was Governor of Massachusetts. And on October 2, 1969 -- the day after 
Peabodv's meeting with McKee and Mansueto in New York -- Peabody introduced 
Mansueto and Hevman to representatives of UMass and of the BBC. 

Peabodv's Earlv Contacts 
With UMass Officials 

On October 2, 1969, Endicott Peabody introduced MBM's Mansueto and Heyman to 

two people connected with the University of Massachusetts. They met over lunch 

at Locke-Ober's in Boston. 159 The people connected with UMass were Morris M. 

Goldings, counsel to the UMass 8uilding Authority, and Robert D. Gordon, a 



155 Poitrast was named Acting Director on September 2, 1969 and Director on 
December 5, 1969. See letter dated December 5, 1969 from Donald R. Dwight to 
Francis W. Sargent, requesting approval of the appointment of Poitrast as BBC 
Di rector . 

156 Notes of 1/2/80 interview of William V. Masiello Py Special Commission 
staff, at 12; see notes of 5/8/79 interview of Willard W. Prince by Special 
Commission staff; Heyman 6/26/79 interview at 4. 

15 7 See notes of 7/24/79 interview of Anthony E. Mansueto by Special 
Commission staff, at 1. 

153 See discussion supra . 

159 Mansueto pocket diary 10/2/69; Heyman testimony, P. A. 6/9/78 at 102. 



57 
trustee of the University who had been appointed to that position oy Peaoody when 
Peabody was Governor. 160 

During the luncheon meeting on October 2, 1969 Peabody spent some time 
speaking on MBM * s behalf. Peabody's performance convinced MBM salesman Heyman 
that Peabodv would be a strong advocate for MBM. I 61 

Gordon and Goldings were friendly ana said they would make others at UMass 
aware of MBM's interest and services. 162 They pointed out, however, that they 
would not be directlv involved in the decision-making process. Accordingly, they 
suggested that Peabody see William R. ("Roy") Hamilton, Jr., the UMass/Boston 
Vice Chancellor who had been designated to serve as the voting representative of 
UMass on the Designer Selection Board. 163 

Shortlv after the October 2, 1969 lunch, Peabody obtained a copy of tne 
minutes of the Seotember 1969 meeting of the UMass Board of Trustees' Committee 
on Buildings & Grounds at which the Committee had decided to recommend that 
Hamilton be desiqnated as the University's voting representative to the DSB on 
matters relating to UMass/Boston. On the top of the first page of the document, 
in what aopears to be Peabody's handwriting, is the notation "Roy Hamilton UM 
Boston" with a box drawn around it. According to Peabody, these minutes and the 
minutes of at least one other such meeting were furnished to him by Rooert 
Gordon. 164 Gordon, in an interview with Commission staff, denied giving these 
or other internal UMass documents to Peabody. -65 



160 Testimony of Endicott Peabody, Sp. Comm. 6/19/80 at 43. 

161 Heyman testimony, P. A. 6/9/78 at 104-105. 

162 Notes of 6/26/79 interview of Martin H. Heyman oy Special Commission 
staff, at 7-8. 

163 Notes of 10/3/78 interview of Morris M. Goldings by Special Commission 
staff at 3; Minutes of Meeting of [University of Massachusetts] Committee on 
Buildings and Grounds: September 18, 1969, at 2. 

164 Peabody testimony, Sp. Comm. 6/19/80 at 42-43. 

165 Notes of 8/9/79 interview of Robert D. Gordon by Special Commission staff, 
at 2. 



58 

Peabody sent copies of the minutes to Mansueto. In a cover letter dated 

October 7, 1969, Peabody cautioned Mansueto to "treat the minutes as 

confidential." 166 Peabodv also wrote: 

"I am glad we had lunch together last Wednesday and Thursday. 
It was important for you to meet Robert Gordon, a trustee of 
the University, and Morris Goldings, who is counsel for the 
State College Building Authority and the University of 
Massachusetts Building Authority." 

The Commission has no evidence o f any direct meetings between Peaoody (or MBM 

salesmen) and Hamilton. However, Peabody did have further contact with Gordon 

before the award of the UMass/Boston contract to M8M. i67 As discussed below, 

UMass eventuallv did give MBM its first-place vote in the D5B balloting for 

UMass/Boston project manager. 

Peabodv's Earlv Contacts 
With BBC Officials 

On October 2, 1969 (the same day as the Gordon-Goldings meeting) Endicott 
Peabody accompanied MBM salesman Heyman -- and possibly also Mansueto 16 ^ 
to a meeting with Acting BBC Director Walter Poi trast . ^ 6 ^ Heyman had -- just 
two weeks earlier -- met with Poitrast and discussed the UMass/Boston 
contract. 1 - 70 And Poitrast had already approved MBM for some small estimating 
contracts . ^ 71 

According to Heyman, the meeting began with Peabody explaining to Poitrast 
that Peabodv was representing M8M. Peabody then deferred to Heyman (and possibly 



166 Letter dated October 7, 1969 from Endicott Peabody to Anthony E. Mansueto. 

167 See discussion infra . Gordon told the Commission that he had no 
recollection of such contacts. See Gordon 8/9/79 interview at 1, 3. 

168 The appointment appeared in Mansueto's pocket diary, with a notation 
changing it from 2 PM to 4 PM . Mansueto pocket calendar for 10/2/69. But 
neither Mansueto nor the other participants recalled Mansueto's presence. 
Mansueto testimony, P. A. 6/9/78 at 86; Poitrast testimony, P. A. 3/21/78 at 50; 
s°e letter dated October 7, 1969 from Endicott Peabody to Anthony E. Mansueto. 

169 Peabody testimony, P. A. 3/7/78 at 101; Poitrast testimony, P. A. 3/21/78 at 
50. 

170 See discussion supra . 

171 See discussion suora. 



59 

Mansueto), who engaged in more substantive discussion . 1 7 2 

Heyman felt that Peabody's presence served at least one useful purpose: 

imparting "stature" and "clout" to MBM.I 73 Heyman further testified that MBM 

needed all the help it could get. According to Heyman, it would have been 

difficult for MBM to win the UMass/Boston contract on merit alone for three 

reasons: CI) the eminence of certain other firms (Turner Construction Company and 

Jackson & Morelandl that had applied for the contract; (2) the fact that the 

competing firms had been established far longer in Massachusetts; and (3) the 

problem of adequately conveying the technical aspects of the services that MBM 

was offering. l 7/t 

Peabodv had further contact with Poitrast. On October 27, 1969 Peabody spoke 

again with Poitrast on MBM's behalf. ^75 Two days later, Peabody wrote a letter 

to Poitrast's administrative assistant, Frederick J. Kussman. In addition to 

being a 3BC official, Kussman also served as executive secretary of the Designer 

Selection Board. •'- 7 ^ Peabodv's letter to Kussman^- 77 began: 

"Dear Fred: When I was in Boston last, I attempted to reach 
you unsuccessfully. I hope tnat we can get together when I 
come to Boston again very shortly." 

After mentioning that MBM had "a very impressive record" and was "extremely 

anxious" to be considered for the UMass/Boston project, Peabody concluded the 

letter by congratulating the BBC for handling an increased workload with a staff 

not much larger "than the [staff] which existed when I was Governor." The letter 

was signed "Chub Peabody." A blind copy of the letter, signed "Chub," was sent 

to Anthony Mansueto, who forwarded copies to Jack Thomas and Martin Heyman. A 

copy o p the oriqinal signed letter was also sent to Gerald McKee, who forwarded 

copies to Mansueto and Heyman. 

On November 13, 1969 Peabody met in Boston with Poitrast and Kussman. I- 78 

Peabodv telephoned his partner Jeremiah Lambert after the meeting, and Lambert 

thereupon wrote a letter, also on the same day, reporting to MBM President McKee 

on Peabodv's meetings with Poitrast and Kussman. The letter stated that Peabody 



172 Hevman 8/23/80 affidavit, at 1. 

173 Heyman testimony, P. A. 3/6/78 at 23-24. 

174 Ijj. at 24-26. 

175 Peabodv testimony, P. A. 3/7/78 at 102; Peabody law firm MBM tub card I. 

176 Testimony of Frederick J. Kussman, P. A. 3/23/78 at 136. 

1 7 7 Letter dated October 29, 1969 from Endicott Peabody to Fredterick J.] 
Kussman . 

178 Peabody testimony, P. A. 3/7/78 at 104. Kussman has testified that he did 
not meet with Peabody in 1969 regarding MBM. Kussman testimony, P. A. 3/2/78 at 
104. 



60 

"understands that MBM is favored as the choice for inhouse consultant [on the 

UMass/Boston project]. Chub cautioned that this is a preliminary indication only 

and must be confirmed through normal administrative channels, but it is in any 

event a verv hopeful sign."l 7 9 

Peabodv had further contact with Poitrast and Kussman, as discussed below. 

Activities by MBM Officials 
Our ; ng October and November 1969 

On October 2, 1969 -- the same day as the meetings with Gordon/Goldings and 

Poitrast -- Anthonv Mansueto had another meeting in Boston which he apparently 

attended without the accompaniment of Peabody or Heyman. This other meeting 

ISO 
was with Albert P. Manzi, the Republican fundraiser. Manzi, as 

discussed elsewhere in this Final Report, helped several firms obtain state 

building-related contracts in return for "political contributions" -- or 

commitments to make such "contributions" -- by those firms. 181 Mansueto had 

met Manzi in 1967 through Frank Masiello and presumably was aware, by 1969, of 

Manzi's influence and methods. 182 j n M arcn 1969 Manzi had personally 

introduced Mansueto (and Heyman) to A&F Commissioner Donald Dwight in connection 

with other work that MBM was then seeking. 183 now that MBM had decided to make 

an all-out effort to obtain the UMass/Boston contract -- which would be awarded 

ultimately by Dwight -- Mansueto felt it appropriate to see Manzi. 

The October 2, 1969 meeting between Mansueto and Manzi took place at Manzi's 

office at the Massachusetts Turnpike Authority suite in the Prudential 

Center. 184 The Commission was unable to obtain testimony about this meeting 

from either Manzi or Mansueto because Manzi asserted his privilege against 



179 Letter dated November 13, 1969 from Jeremiah D. Lambert to Gerald J. [ sic ] 
McKee, Jr. 

180 Mansueto pocket calendar, 10/2/69; Mansueto pocket "month-at-a-glance" 
calendar and desk calendar for October 1969. 

181 See the sections on A New Campus for Holyoke Community College, and the 
Joseph P. Gentile School, in Volume 3 of this Final Report. 

182 See discussion in Chapter III supra . 

183 See discussion supra . 

184 See sources cited in n. 180 supra . 



61 
sel f-incr iminat ionl85 anc j Mansueto refused to appear and testify before the 
Commission . 186 in 1979, at the Manz i-Masiel lo trial, Mansueto admitted that he 
met with Manzi on October 2, 1969 but testified that the meeting concerned 
Massachusetts business in general, not UMass speci f ically . 187 

After October 2, 1969, Mansueto and Heyman do not appear -- from the 
documentary record available to the Commission -- to have had many more contacts 
with the BBC, UMass, DSB, or A&F until shortly before the UMass/Boston contract 
was awarded. Mansueto's rather detailed diaries, for example, contain merely an 
entry for October 17, 1969 reading "discuss Boston" and one for Novemoer 21, 1969 
indicating an appointment with BBC Director Poitrast.188 As for Martin Heyman, 
he may have had one or two unscheduled and brief meetings with Frank O'Brien and 
Willard Prince of the UMass/Boston planning staff, but O'Brien and Prince do not 
recall such sessions. 189 Heyman said, in testimony to the Post Audit 
Subcommittee, that he had "done [his] homework with [Frederick] Kussman [of the 
3BQ]"190 DtJ f provided no specifics. Heyman later revealed, in an affidavit to 
the Commission, that he had a telephone conversation in 1969 with Kussman in 
which Kussman remarked that MBM had "powerful friends. "191 



185 Testimony of Albert P. Manzi, Sp. Comm. 6/9/80 at 8. 

186 Se_e Sp. Comm. 6/27/80 at 4-5. 

187 Mansueto testimony, 6 M/M 2/20/79 at 32, 35-40. In a separate but perhaps 
related matter, one of Mansueto's calendars for October 2, 1969 contained the 
entry: "Masiello re K." Mansueto "month-at-a-glance" calendar for October 1969. 
The Commission does not know whether the "Masiello" was intended to refer to 
Frank Masiello or William Masiello. Nor does the Commission know whether the "K" 
referred to the UMass/Boston contract" (since "K" is a common abbreviation for 
"contract") or to something or someone else. 

188 Mansueto pocket calendar for 10/17/69, 11/21/69. 

189 See Heyman 8/23/80 affidavit at 1; notes of 5/15/79 interview of Francis 

E. O'Brien, Jr. by Soecial Commission staff, at 6; notes of 6/13/80 interview of 
Francis E. O'Brien, Jr. by Special Commission staff, at 3; notes of 5/8/79 
interview of Willard W. Prince by Special Commission staff, at 7. 

190 Heyman testimony, P. A. 3/6/78 at 18. 

191 Heyman 8/23/80 affidavit at 2. Heyman says he called McKee in New York to 
report on this conversation, and McKee had Heyman report it directly to Peabody. 

Id. 



62 

As for MBM President McKee , he testified that he was not actively involved in 

the effort to win the UMass/Boston contract. I 92 

The Short-lived Seelye-McKee 
Joint Venture Proposal 

When MBM submitted its application to the Designer Selection Board on October 
6, 1969,^93 it did so as the junior member of a proposed joint venture. mbm 
recognized that it was not capable of handling the site development ana utility 
work which the DSB had linked with project management in the single Request for 
Proposals. 1^^ MBM's proposed joint venture partner was the engineering firm of 
Seelye Stevenson Value & Knecht ( "SSV&K" ) . 1 95 SSV&K and MBM had undertaken 
joint ventures before, most notably on a United States Air Force construction 
proiect in Thailand. 196 Although SSV&K apparently would have handled the 
UMass/Boston utility work without help from MBM, it was planned that personnel 
from both firms would participate in providing project management services. 1 ^ 7 

At some point in October or November 1969, the Seelye firm dropped out of the 
proposed joint venture. No contemporaneous document explaining SSV&K's action 
has been found. It is possible that the SSV&K-MBM joint venture simply dissolved 
when the DSB decided to split what had been one contract into two contracts (with 
proiect management being separated from the site and utility work).l 9 ° A 
different exolanation was presented to the Commission in testimony by Stanley 
Davis, a former SSV&K employee. I 99 Davis's testimony is discussed in Chapter 
V, below. 



192 McKee testimony, P. A. 3/22/78 at 9-10. McKee did not provide the 
Commission with any of his diaries or expense reports from 1969, which might nave 
been of interest on this point. The Commission was told that McKee had made such 
records available to Federal authorities in 1975, 1976 and/or 1977. Interview of 
Arnold Stream by Special Commission staff; Notes of 7/2/79 interview of Ralph 
Sealey by Special Commission staff, at 2. 

193 See "Chronology of Selection, Appointment, Negotiations and Consummation 

of ConTract No. 601, State Project No. U67-4 No. 2A," prepared oy MBM in Feoruary 
of 1971. The microfilm of the Seelye-MBM proposal is missing from DSB records. 

L94 McKee testimony, P. A. 3/22/78 at 17. 

19 5 Id. 

196 Testimony of Stanley Davis, Sp. Comm. 5/29/80 at 21-22; McKee testimony, 
So. Comm. 6/26/80 at 134-135. 

197 See undated document headed "Candidates for University of Massachusetts 
Project, Columbia Point," found in MBM's files. 

198 See testimony of Earle F. Littleton, P. A. 3/1/78 at 19; McKee testimony, 
Sp. Comm. 6/26/80 at 135. 

199 Testimony of Stanley Davis, Sp. Comm. 5/29/80 at 19-25. 



63 

The Interviews of 

Five Semi-Finalists 

Bv the Designer Selection Board 

Although more than fifty firms applied for the UMass/Boston project 
management contract, most appeared clearly unqual i f ied . 200 indeed, the DS8 
solicited additional applications for this reason. 201 

In late November of 1969, the DSB decided to interview five of the 
firms. 202 Accordingly, the DSB interviewed MBM, Mauchly Associates, and 
Jackson & Moreland ("J&M" , > on December 3, 1969; and Turner Construction and Carl 
Morse. Inc. on December 10, 1969.203 

MBM's presentation before the Designer Selection Board took place at 1:45 
p.m. on December 3, 1969 and was made by Mansueto and Heyman. According to E. 
Edward Rossi, who was present at the meeting, 204 the MBM representatives were 
"verv slick" with a "fast sales pitch" and a "Madison Avenue show, complete with 
graphics, cards, and charts. "205 According to UMass/Boston Planning Director 
Francis 0'8rien, MBM's presentation correctly emphasized the time that could be 
saved bv coordination during the pre-cons truct ion stages, an approach that 
O'Brien supported and that was not stressed by any of the other firms. 206 The 
oresentation bv Jackson & Moreland left Rossi with the impression that the firm 



200 Testimony of Earle F. Littleton, P. A. 3/1/78 at 18-19. 

201 Id.: Kussman testimony, P. A. 3/2/78 at 170; letter dated May 24, 1972 from 
Frederick J. Kussman to Joseph J.C. DiCarlo. 

202 P. A. Report at 26, citing minutes of 71st regular meeting of the Designer 
Selection Board, NovemOer 26, 1969. 

203 P. A. Report at 26. 

204 Notes of 9/11/79 interview of E. Edward Rossi by Special Commission staff, 
at 4. Rossi attended the meeting as the voting representative from the Division 
of State Colleges concerned with other business before tne DSB. 

205 Id. at 5. 

206 O'Brien 6/13/80 interview, at 3. 



64 
was less eager to win the UMass/Boston project management than to work as 
consultant to one or more of the architects -- work wnich might be more lucrative 
in J&M's est imat ion . 207 Mauchlv Associates' presentation was made by its Vice 
President, Daniel J. Shields, salesman William F. Harding, and Boston operations 
manager William D. Regan. 208 

At the DSB meeting on December 10, 1969, Turner Construction and Carl Morse 
made their presentations. Before the December 10, 1969 meeting concluded, the 
DSB directed BBC project engineer Edmund J. McAdam, Jr. to visit and interview 
the five firms and to report his recommendations at the DSB meeting to oe nela on 
December 17, 1969.209 The DSB planned to select the three finalists at the 
December 17, 1969 meeting after hearing McAdam's report. 210 

On December 11, 1969 -- the day after the second group of interviews before 
the Designer Selection Board -- Endicott Peadody spoke by telephone with 
Frederick Kussman (the BBC official who served as executive secretary to the 
DSB'). According to a handwritten memorandum about the call that Peabody wrote to 
his partner Jeremiah Lambert, Kussman indicated that "MBM Iooks very good." 21 -!- 
Peabodv's memo continued: "Recommendation will be made next Wednesday [December 
17, 1969] to the [A&F Commissioner's] office and he [A&F Commissioner Donald 
Dwight] will make the select ion . "21 2 Also on December 11, 1969 Peabody called 



207 Rossi 9/11/79 interview, at 5. 

208 Notes of 9/14/79 interview of William D. Regan by Special Commission 
staff, at 4. 

209 Testimony of Edmund James McAdam, P. A. 3/7/78 at 5-6; minutes of the 74th 
regular meeting of the Designer Selection Board, December 17, 1969, at 1. 

210 Agenda of 74th regular meeting of the Designer Selection Board, December 
17, 1969, supplement. 

211 Memorandum from [Endicott] Peabody to [Jeremiah D.] Lambert re: 
conversation with Kussman on 12/11/69 concerning MBM. 

212 Id. 



65 

Mansueto in New York, 213 perhaps to report this news from Kussman. In 

addition, Peabody wrote a letter that day to UMass trustee Robert Gordon, with a 

copv to Morris Goldings, saying, "I believe the Board of Review [Designer 

Selection Board] and the Bureau of Building Construction is making 

McKee-Berger-Mansuet [o ] Number 1 on their list.... I would appreciate any 

opportunity you have to look into this. "214 

Endicott Peabody's Discovery of, 

and Response to, a Conflict of Interest 

On December 12, 1969 -- the day after the encouraging comment from Kussman -- 
Endicott Peabody learned that the Peabody firm was in jeopardy of losing the 
large fee that it had expected to receive if MBM won the UMass/Boston contract. 
The problem was a conflict of interest. Peabody testified about this matter 
before the Post Audit Subcommittee in 197S. The Commission has pursued the 
investigation that the Post Audit Subcommittee was conducting on tnis subject. 

Peabodv has testified that he first became aware of the conflict of interest 
during a telephone conversation on DecemPer 12, 1969 with Albert H. 
Zabr iskie . 21 5 Zabriskie was a former mayor (of Newburyport) and former state 
legislator who knew, and had campaigned for, Peabody. 216 j n 1969, ZaDriskie 
joined the Executive Office of Administration & Finance, serving as Deputy to 
Donald Dwight. 2 ^- 7 Dwight, as Commissioner of A&F, was to choose the winner of 
the UMass/Boston project management contract. 

Peabodv testified that he telephoned Zabriskie on December 12, 1969 to 
discuss MBM and the UMass/Boston contract. Peabody asked Zabriskie, auring this 
conversation, whether any of MBM's competitors for the contract were being 
represented by "lobbyists" (to use Peabody's term). Zabriskie replied that 



213 Peabody telephone records. 

214 Letter dated December 11, 1969 from Endicott Peabody to Robert D. Gordon. 
Peabodv testified to the Commission that he could not recall what he had meant by 
asking Gordon to look into the matter. Peabody testimony, Sp. Comm. 6/19/80 at 
46. 

215 Peabody testimony, Sp. Comm. 6/19/80 at 94-95. 

216 Testimony of Albert H. Zabriskie, Sp. Comm. 4/16/80 at 5. 

217 id. at 6-7. 



66 

State Senator Ronald C. MacKenzie was lobbying on behalf of Mauchly 
Assoc iates . 218 

ZabrisKie was correct that MacKenzie was trying to help Mauchly. 219 
Moreover, MacKenzie appeared to have a bright future ahead of him and -- like 
Owight -- was a Reoublican. 

The reason that Zabriskie knew of MacKenzie's involvement was that MacKenzie 
had just introduced Mauchly's top salesmen, Daniel Shields and William Harding, 
to Owight. 220 j'-, e Mauchly firm also had the distinctions of (a) naving been 
founded by one of the inventors of the electronic digital computer221 and (b) 
being a wholly-owned subsidiary of a conglomerate -- Scientific Resources 
Corporation ("SRC") -- which was listed on the New York Stock Exchange. 222 

Mauchly had submitted its application for the UMass/Boston project management 

contract bv a letter dated October 7, 1969 sent on SRC letterhead 

stat ionery . 223 As explained in SRC's Registration Statement filed with the 

Securities and Exchange Commission on February 28, 1969224 __ 

"Project management is performed primarily by Mauchly itself. 
This computer-based planning, scheduling and control service 
employs CPM and related techniques during project design and 
construction. Engineering and construction knowledge, supported by 
electronic data processing programs and facilities permit the 
companv to help its clients to meet project completion deadlines 
and achieve timely occupancy.... 

"Most project management work has been done for public bodies, 
colleges and hospitals whose operational requirements often make it 
essential that a desired project completion date be met. Because 
most of the projects for which the Project Management Division 
attempts to sell its services are major and well -publ icized 
undertakings, there are often a number of competitors seeking the 
same bus iness . " 



218 Peabody testimony, Sp. Comm. 6/19/80 at 94-95; P. A. 3/7/78 at 104; P. A. 
3/29/78 at 20, 46-47; see memorandum for the file dated December 12, 1969 signed 
ov Endicott Peabody, concerning McKee-Berger-Mansueto . 

219 See discussion in Chapter X in f ra . 

220 Testimonv of Ronald C. MacKenzie, Sp. Comm. 5/28/80 at 15-16; Shields 
testimony, So. Comm. 6/2/80 at 14; Harding testimony, Sp. Comm. 6/4/80 at 22-23. 

221 See discussion in Chapter II supra . 

222 See The Commercial and Financial Chronicle , 1969. 

223 Letter dated October 7, 1969 from William F. Harding to DS8 Chairman Earle 
F. Littleton. 

224 SRC Registration Statement, filed 2/28/69 with the SEC, at 18. 



67 

v 

Mauchly's ownership by SRC posed the problem for Peabody. Peabody was a 
member of SRC's board of directors, 225 so that Peabody's work for MBM 
constituted a clear conflict of interest with respect to Peabody's fiduciary 
responsibilities to SRC. 226 

Although Peabody has testified that he cured the conflict of interest by 
suspending his efforts on behalf of MBM, 227 n was no ^- Peaoody's engagement by 
MBM on October 1, 1969 that precipitated the conflict of interest. The problem, 
rather, occurred when Peabody was elected to the board of directors of SRC on 
October 23, 1969228 __ three weeks after Peabody had begun trying to help MBM 
win the UMass/Boston contract. Peabody has testified that he had no idea tnat he 
was engaged in this conflict of interest until he realized it during the December 
12, 1969 conversation with Zabriskie . 22 9 

Peabodv has indicated that upon discovering the conflict of interest on 
December 12, 1969, Peabody called his partner Lambert and they agreed that 
Peabodv should disclose his position immediately to Mauchly and to MBM. 2 ^ 
Peabody placed calls on December 12, 1969 to SRC President Thomas Fleming and to 
Mauchly Project Management Division President Louis F. Cimino but was unable to 



225 Peabodv testimony, Sp. Comm. 6/19/80 at 95. 

226 See Peabodv 12/12/69 memorandum for the file. 

227 Peabody testimony, Sp. Comm. 6/19/80 at 92-94; P. A. 3/29/78 at 20. 

223 SRC Notice of 3/3/70 Annual Meeting (notice dated 1/30/70), at 3, n. 5, 

229 Peabodv testimony, Sp. Comm. 6/19/80 at 94-96. 

230 Peabody 12/12/69 memorandum for the file. 



68 
reach either. 231 Peabody then called Mansueto in New York and, according to 
Peabodv, "brought him up-to-date on the information I [Peabody] had up to the 
point I had learned of the conflict" and told Mansueto that Peabody "could do 
nothing more until the matter was worked out sat is factoril y . "232 According to 
a "memorandum for the file" signed by Peabody and dated December 12, 1969, 
Mansueto suggested the possibility of a joint venture with Mauchly on the UMass 
project, and Peabodv said that he would convey that proposal to Mauchly. 233 
Peabody did not SDeak to anyone from SRC or Mauchly until December 16, 1969,234 
nor did he notify SRC in writing of the conflict of interest or send a telegram 
or letter to MBM confirming his withdrawal from representing MBM. Mansueto, 
McKee , Fleming, and Cimino have all denied (or said they had no recollection) 
that Peabody told them of the conflict of interest and of his decision to stop 
representing MBM. 235 

Although Peabodv testified that he did not resume representing MBM until 
after the DS3 eliminated Mauchly from consideration on December 17, 1969,236 
Peabody had several telephone conversations on December 16, 1969 -- which Peaoody 



231 Peabody daily office record, 12/12/69. Peabody had spoken with Fleming 
and Cimino, oresumably on other suojects, prior to Peabod/'s election to SRC's 
board of directors, according to Peabody telephone records for September and 
October 1969. 

232 Peabody 12/12/69 memorandum for the file. 

233 Id. 

234 Id. Peabody telephone records, 12/12/69 - 12/16/69. Peabody daily office 
record, 12/12/69 - 12/16/69. Peabody law firm MBM tub card, 12/12/69 - 12/16/69, 

235 Mansueto testimony, P. A. 5/23/78 at 33; McKee testimony, P. A. 3/22/78 at 
59; notes of 9/14/79 interview of Thomas T. Fleming by Special Commission staff 
at 5: notes of 3/27/80 interview of Louis F. Cimino by Special Commission staff, 
at 4. 

236 Peabodv testimony, P. A. 3/7/78 at 104-105, 146; P. A. 3/29/78 at 47-48, 
133-134; So. Comm. 6/19/80 at 93-96. 



69 

knew was the day before the DSB was going to select tne tnree finalist 

firms. 237 one of Peabody's telephone conversations on December 16, 1969 was 

with MBM salesman Martin Heyman.238 Peabody jotted down some notes of the 

conversat ion : 239 

"[Heyman] met today with Ed McAdam -- BBC appointee to be 
[internal BBC] project manager [for UMass /Bos ton ] . 

"Frank O'Brien [is UMass /Boston ' s ] Planning Director & 
Hamilton [the UMass voting representative to the DSB] leans 
heavilv -- get vote of UMass . 

"2 most important of 7 votes. 

"Tomorrow after lunch the voting -- call to a meeting on 
the 22nd. -- 

"Al Zabriskie." 

Also on December 16, 1969, Peabodv called Robert Gordon, the UMass 

trustee. 240 Peabodv's notes about this ohone call read:241 

"Hamilton thinks J&M [Jackson & Moreland] have an inside 
track. Has a vote but going slow on it." 

Peabodv also spoke with Anthony Mansueto on December 16, 1969.242 

According to Mansueto, they discussed how to deal with an offer that Jackson & 

Moreland had made to provide free space for the BBC if J&M were awarded the 

(Mass/Boston contract. 243 
In addition to the foregoing telephone conversations, Peaoody also spoxe with 
MBM President McKee and BBC Director Poitrast on December 16, 1969.244 McKee 



237 See text accompanying note 212, supra . 

238 Peabodv daily office record, 12/16/69. 

239 Memorandum handwritten bv Endicott Peabody. 

240 Peabodv daily office record, 12/16/69; Peabody law firm MBM tub card I, 
12/16/69. Peabody testimony, Sp. Comm. 6/19/80 at 46-47. 

241 Memorandum dated 12/16/[1969] handwritten by Endicott Peabody, titled 
"Robert Gordon 12/16." 

242 Peabody daily office record, 12/16/69. 

243 Mansueto testimony, P. A. 5/23/78 at 13-16. 

244 Peabody telephone records, 12/16/69; Peabody law firm MBM tub card I, 
12/16/69. 



70 
and Poitrast testified that they do not recall these conversations . 245 

Peabody also finally spoke with SRC President Fleming on December 16, 1969. 
During that conversation, according to Peabody's testimony, Peabody informed 
Fleming of the conflict of interest and of MBM's proposal for a joint 
venture. 2^6 Fleming said that he would have to think about trie joint venture 
suggestion and get back to Peabody. 247 i n the meantime, prooably during one of 
the other teleohone conversations, Peabody wrote: "12/16. MBM . Mauchly a loser 
anyway -- too computer based & not field oriented . "248 

On December 22, 1969, Fleming called Peabody back and, according to Peabody, 
"said there were problems . "249 Fleming might have been referring to Peabody's 
conflict of interest or to the proposed joint venture. Peabody replied that it 
was already too late: Mauchly had been eliminated from consideration by the DSB 
on December 17, 1969, and MBM had been awarded the contract. 250 g u t Peabody 
assured Fleming that Peabody had not acted on MBM's behalf from December 12, 1969 
Cwhen Peabodv learned of the conflict) until December 18, 1969 (the day after 
Mauchly was e 1 1 minated ) . 251 Peabody gave similar assurances in testimony 
before the Post Audit Subcommittee and the Commission . 252 He also testified 
that his calls on December 16, 1969 to Heyman, Gordon, Mansueto, McKee , and 



245 McKee testimony, P. A. 3/22/78 at 59. Poitrast testimony, P. A. 2/23/78 at 
60-61. 

246 Peabodv daily office record, 12/16/69. Peabody testimony, Sp. Comm. 
6/19/80 at 95. 

247 Peabody testimony, Sp. Comm. 6/19/80 at 95. 

248 Memorandum dated December 16, [1969] handwritten by Endicott Peabody, 
titled "MBM." 

249 Memorandum dated Monday, December 22, [1969], 5 pm, handwritten by 
Endicott Peabody at the bottom of the Peabody 12/12/69 memorandum for the file 
concerning McKee-Berger -Mansueto. 

250 Id. 

251 Id. 

252 Peabody testimony, P. A. 3/7/78 at 104-105, 146; P. A. 3/29/78 at 47-48, 
133-134: So. Comm. 6/19/80, at 93-96. 



JJ 

Poitrast merely involved attempts to find out if the DSB had acted -- so that 

Peabody would know whether he could resume his representation of MBM during the 

final stage of the contract-award process ( i.e. , the stage in which A&F 

Commissioner Dwight would select one of the three finalists as the winner). 253 

The DSB's Selection of 
Three Finalists on 

December 17, 1969 

On December 17, 1969 the Designer Selection Board met to select three 
finalists for the UMass/Boston project management contract. 254 Those names 
were to be forwarded to A&F Commissioner Donald Dwight, who would choose one of 
them as winner of the contract. 

Before voting, the DSB heard the evaluations of the five semi-finalists that 
it had asked BBC engineer Edmund McAdam to make. 255 McAdam had visited the 
offices of only three finalists, but he reported on all five of them. One of the 
firms that McAdam had not visited was Mauchly,256 ev en though Mauchly's office 
was within three blocks of the BBC's office. 257 

McAdam told the DSB that Turner Construction could provide the necessary 
in-d=pth services. 258 He also reoorted " without any reservation " that Jackson 
& Moreland had the necessary gual i f icat ions , personnel and facilities in Boston 
to perform all the required services on the UMass/Boston project. 259 McAdam 
was less enthusiastic about MBM. He expressed the opinion that MBM did not have 



253 Peabody testimony, P. A. 3/29/78 at 135. 

254 Agenda of 74th regular meeting of the Designer Selection Board, Decemoer 
17, 1969, suoplement. 

255 Minutes of the 74th regular meeting of the Designer Selection Board, 
December 17, 1969, at 1. Memorandum dated December 17, 1969 from E[dmund] McAdam 
to the Desiqn[er] Selection Board, concerning the selection of the project 
management consultant for UMass/Boston. 

256 McAdam 12/17/69 memorandum at 1. 

257 Contemooraneous documents show that Mauchly's office was at 15 Court 
Square and the BBC's office was at 100 Cambridge Street. 

258 McAdam 12/17/69 memorandum at 3. 

259 Id . at 2 (emphasis original). 



72 
on its present staff in Boston the professional engineers and architects 
necessary for the project. Moreover, MBM's proposed project manager was not a 
registered professional engineer, which McAdam said was a requirement for the 
position. 260 without having visited Mauchly, McAdam reported that the firm 
lacked the necessary in-depth staff in design review and construction although it 
aDoeared strong in CPM, the computer scheduling of design ana const ruction . 261 

McAdam presented a memorandum to the DSB on December 17, 1969 that recorded 
these evaluations . 262 McAdam's memorandum concluded by recommending three 
firms in the following order: (1) Jackson & Moreland; (2) Turner Construction; 
and (3) MBM.263 

The DSB then voted for the three firms that McAdam had recommended . 264 
UMass aDDarently gave MBM its first place vote. 265 j_t ^ s no i- c i e ar how the 
other six DSB members cast their votes. The names of the three finalist firms 
were then forwarded -- in alphabetical order -- to A&F Commissioner Donald 
Dwight . 266 

Although the identity of the finalists was supposed to be secret until tne 
winner was selected, 267 Endicott Peabody has testified that he heard of the 
decision the same day, probably from Poitrast or Kussman.268 with Mauchly 
eliminated, Peabody decided that he no longer had a conflict of interest so he 
"stressed to Mr. Poitrast the qualifications of MBM as compared with the 



260 Id_. at 2; McAdam testimony, P. A. 3/7/78 at 19-20. 

261 McAdam 12/17/69 memorandum, at 2; McAdam testimony, P. A. 3/7/78 at 31. 

262 McAdam 12/17/69 memorandum; Poitrast testimony, P. A. 3/2/78 at 26-27. 

263 McAdam testimony, P. A. 3/7/78, at 36; McAdam 12/17/69 memorandum, at 3. 

264 Minutes of 12/17/69 DSB meeting, at 2. 

265 Willard Prince says that UMass may have voted only for MBM. Notes of 
5/8/79 interview of Willard Prince, at 3. William R. Hamilton, Jr. says he has 
no recollection of voting only for one firm, but he does recall that MBM was one 
of the firms he favored. Hamilton 5/13/79 interview, at 14-16. 

266 Letter of transmittal dated December 17, 1969 from Earle F. Littleton to 
Donald P. Dwight. 

267 Littleton testimony, P. A. 3/1/78 at 39-40. 

268 Peabody testimony, So. Comm. 6/19/80 at 93-94. See Peabody daily office 
record, 12/17/69: Peabody telephone log, 12/17/69. 



7 3 
qualifications of the other firms recommended by the Board. "269 More to the 

point -- since A&F Commissioner Donald Dwight would be making the final decision 

-- Peabody turned his attention to A&F. 

The Alleged Meeting of Endicott Peabody 

and Deoutv A&F Commissioner 

Albert H. Zabriskie on December 18 or 19, 1969 

Endicott Peabodv knew Donald Dwight both professionally and personally. 
Peabodv , while Governor, had launched Dwight's career in public life oy 
appointing Dwight to the Department of Public Works. Beyond this political iink, 
Peabody knew Dwight's family. 270 Peabody understood that the selection of the 
UMass/Boston project management firm was a matter totally within Dwignt's 
discret i on . 271 Peabody also was aware that his own firm would receive a large 
fee from MBM if Dwight chose MBM for the UMass/Boston job. 272 

Nonetheless, Peabody testified that he had no contact with Dwight, eitner in 
person or bv telephone, at any time during the selection process for the 
UMass/Boston project management contract. 273 Instead, Peabody stated that he 
contented himself with two discussions with Dwight's Deputy Commissioner, Albert 
H. Zabriskie. The first of those conversations took place over the telephone on 
December 12, 1969; it has been discussed above. The other discussion, according 
to Peabodv. took place on the evening of December 18 or 19, 1969 at Zabriskie's 
home in Newburyoort . 274 

In interviews, Albert Zabriskie has told Commission staff that he recalls no 
meetings with Peabody during December 1969.275 However, Zabriskie has also 
said that he does not recall other meetings with Peabody about which Peabody 
wrote lengthv and detailed contemporaneous memoranda. Members of Zabriskie's 
family recall Peabody going to Zabriskie's mother's house around Christmas time, 
probablv in 1969, looking for Zaoriskie . 276 



269 Peabody testimony, P. A. 3/7/78 at 105. 

270 Peabody testimony, Sp. Comm. 6/19/80 at 101. 

271 See discussion suora . 

272 See discussion suora and in Appendix A to this Final Report on MBM. 

273 Peabodv testimony, Sp. Comm. 6/19/80 at 101, 113, 126. 

274 Peabody testimony, Sp. Comm. 6/19/80 at 143-144. 

275 Notes of 3/3/80 and 10/3/80 interviews of Albert H. ZabrisKie by 
Commission staff. 

276 Id. 



74 

Judging from Peabody's testimony, Peabody's alleged meeting with Zabriskie on 
December 18 or 19, 1969 was regarded by Peabody as an important prelude to a 
meeting that Peabody intended to set ud with Dwight. 277 Peabody testified that 
he flew from Washington, D.C. to Boston on December 18 or 19, 1969 solely to meet 
with Zabr isk ie . 278 Rather than inconvenience Zabriskie, Peabody rented a car 
and drove to Zabriskie's house, according to Peabody's testimony . 279 During 
his conversation with Zabriskie, Peabody tried to explain wny MBM was 
"pre-eminent" and better qualified than Turner and Jackson & Moreland, Peabody 
test i f ied . 280 

According to Peabody's testimony, Peabody received the impressions that 
Zabriskie would probably recommend MBM to Dwight and that Dwight would probably 
weigh Zabriskie's recommendation heavily. 281 However, Zabriskie did not say 
that Dwight had f ully and irrevocably delegated the decision to Zaoriskie, nor 
did Zabriskie say that Dwight had already decided to award the contract to MBM, 
according to Peabody's test imony . 282 Moreover, Zabriskie was new at A&F.283 
and Peabody had no way of knowing whether Dwight would follow what Peabody 
believed would be Zabriskie's recommendation. 284 

Accordingly, Peabody told Zabriskie that Peabody wanted to speak directly 
with Dwight, Peabody tes t i f ied . 285 According to Peabody, Zabriskie replied 
that it was not necessary for Peabody to talk to Dwight. 286 Peabody testified 
that although he knew Dwight personally, and although quite a bit was at stake 
for Peabody and for MBM, Peabody decided not to contact Dwight. 287 Peaoody 



277 See Peabody testimony, Sp. Comm. 6/19/80 at 99. 

278 Peabody testimony, Sp. Comm. 6/19/80 at 98. 

279 id. at 106. 

280 Id. at 98-99, 108-109. 

281 Id. at 99-100, 130-132. 

282 Id. at 121, 126. 

283 Zabr^ski'e testimony, Sp. Comm. 4/16/80 at 7. He began at A&F on August 
25, 1969. 



284 Peabody testimony, Sp 

285 Id. at 99. 

286 Id. at 99-100. 

287 id. at 103-104. 



Comm. 6/19/80 at 102, 



75 

testified that although he was "fully prepared ... and indeed wanted" to contact 

Dwight, he decided not to do so because of a concern that Zabriskie might find 
out about such a contact and feel sufficiently "crossed" as somehow to cause 
Dwight not to select MBM. 288 



288 Id 



76 



The Alleged Meeting of MBM Vice President 

Anthony Mansueto and MBM Salesman Martin Heyman 

*ith A&F Commissioner Donald Dwiqht on December 19, 1969 

Although Endicott Peabody may not have spoken with Donald Dwight, there is 

evidence that MBM Vice President Anthony Mansueto and MBM salesman Martin Heyman 

did meet with Dwight on December 19, 1969. In particular, Martin Heyman 

testified twice and executed an affidavit about the meeting, 289 and the 

following is Heyman's account: When Heyman learned on December 17, 1969 that MBM 

had been selected as a finalist for the UMass/Boston contract, he suggested to 

Mansueto that a meeting be arranged with A&F Commissioner Donald Dwight, since 

Dwight would be awarding the contract. 290 Heyman and Mansueto had already met 

once with Dwight, when they were introduced to Dwight by Albert Manzi 

on March 25, 1969.291 Heyman's suggestion was followed, and it was probaDly 

Mansueto who set up the meeting, although Peabody may have arranged it. 292 

The meeting took place on Friday, December 19, 1969 and consisted of an informal 

presentation and discussion of the project and MBM's capabilities. Only Dwight, 

Hevman, and Mansueto were present. 293 Dwight did not ask any incisive 

quest i ons , 294 an d Heyman and Mansueto left the meeting feeling let down and 



289 See Hevman testimony, P. A. 3/6/78 at 29-33; P. A. 6/9/78 at 23-28; Heyman 
8/23/80 affidavit at 1. 

290 Heyman testimony, P. A. 3/6/78 at 29. 

291 See discussion supra 

292 Hevman testimony, P. A. 3/6/78 at 29. It is also possible that there was 
no orior appointment, and that Heyman and Mansueto simply walked in. Heyman 
testimony, P. A. 6/9/78 at 23. 

293 Hevman testimony, P. A. 6/9/78 at 26-27; Heyman 8/23/80 affidavit, at 2. 
Heyman testified that the meeting occurred on December 18 or 19 and tnat Mansueto 
definitely was present. Mansueto was in Boston only on December 19. See 
Mansueto pocket diary, 12/18/69 and 12/19/69. 

294 Heyman testimony, P. A. 6/9/78 at 28. 



77 
'uneasy because Commissioner Dwight was not as cordial and friendly as at tne 
jrior meeting when Mr. Manzi had introduced us. "295 

Mansueto, in testimony before the Post Audit Subcommittee in 1978, said that 
le did not recall such a meeting. 296 However, Mansueto's pocket diary shows 
pat Mansueto Dlanned to fly to Boston on December 18, 1969. The diary indicates 
:hat Mansueto intended to go first to Chicago 3nd then to Boston, returning to 
>Jew York early on December 19, 1969, in time for MBM's Christmas party. 297 But 
5ad weather in Chicago prevented Mansueto from getting to Boston on December 18, 
:969, so he flew to Boston on December 19, 1969, delaying his return to New 
fork. 298 Presumably, Mansueto would not have made the detour to Boston unless 
^e considered it important. 

The Commission wished to guestion Mansueto aoout this matter, particularly in 
Light of Endicott Peabody's new testimony about a meeting that Peaoody allegedly 
iad with Dwight's deputy (Albert Zabriskie) on December 18 or 19, 1969. 
Jn F ortunately , Mansueto refused to appear and testify before the Commiss ion . 299 

Endicott Peabody has testified that he did not know of the 
Hevman-Mansueto-Dw ight meeting in 1969.300 Peabody acknowledged that ne spoke 
with Mansueto and Heyman bv telephone on December 19, 1969 but said that he did 
not recall what they discussed . 301 

As for Donald Dwight, he testified to the Post Audit Subcommittee in 1978 and 



295 Heyman 8/23/80 interview at 2. See Heyman testimony, P. A. 6/9/78 at 
18-19, 28: P. A. 3/6/78 at 32-33. 

296 Mansueto testimony, P. A. 5/23/78 at 20-22; P. A. 6/9/78 at 79. 

297 Mansueto pocket diary, 12/18/69 and 12/19/69. 

298 id. 

299 See Sp. Comm. 6/27/80 at 4-5. 

300 Peabody testimony, Sp. Comm. 6/19/80 at 125. 

301 Id. at 115, 121-122. 



78 
in initial testimony to the Commission in 1980 that he did recall meeting with 
MBM officials, including one of the principals [proPaoly Mansueto] on a "courtesy 
call" on some occasion before he selected MBM for the UMass/3oston 
contract. 302 But he indicated that he did not remember whether that meeting 
occurred in December 1969 or at some other time. 303 jh e Commission wished to 
question Dwight at length about these matters, but Dwight -- an out-of-state 
witness who asked the Commission to extend him the courtesy, as a former 
Lieutenant Governor, of not subpoenaing him while he was in the state -- did not 
keep his promise to return for full, public testimony . 304 

Because of the conflicting testimony about the alleged Peabody-Zaor iskie 
meeting and the alleged Dw ight-Mansueto-Heyman meeting, it is difficult to Know 
what to make of these alleged meetings. This is particularly true since it is 
unclear whether the alleged Peabody-Zabr iskie meeting took place on tne evening 
of December 18, 1969 (the night be fore the alleged Dwight-Mansueto-Heyman 
meeting 1 ) or whether it occurred on the night of December 19, 1969 (some time 
a f ter the alleged Dwight-Mansueto-Heyman session). 

If Peabody met with Zabriskie on December 18, 1969, it may be that 
Zabriskie's suggestion that Peabody avoid direct contact with Dwight caused 
Mansueto and Heyman to see Dwight on December 19, 1969. On the other hand, if 
Peabodv met Zabriskie on the evening of December 19, 1969, Peabody may have done 
so as a result of the Dwight-Mansueto-Heyman meeting earlier in the day which 
left Mansueto and Hevman uneasy about MBM ' s chances of winning the contract. 
Finally, of course, it may be that one or both of these meetings did not taKe 
□lace as described by Peabodv and/or Heyman. 305 without being able to question 
Mansueto and Dwight fully and under oath, the Commission cannot resolve these 
matters . 



302 Testimony of Donald R. Dwight, P. A. 3/15/78 at 24, 44-45; Sp. Comm. 
4/14/80 at 16. 

303 Dwight testimony, P. A. 3/15/78 at 44-45. 

304 See statement of Commission Chairman John William Ward, Sp. Comm. 4/i4/80 
at 3-5. 

305 This raises other possibilities. For example, the Dwight-Heyman -Mansueto 
meeting may have occurred on December 19, 1969 as described by Heyman, and 
Peabody may thereafter have driven to Newburyport but not found Zabriskie, as 
Zabriskie maintains. 






79 



The MBM Christmas Party 

in New York on 

December 19, 1969 

The 1969 MBM Christmas partv in New York was held on Friday, December 19, 
1969, beginning at 3 p.m. 306 Anthony Mansueto arrived after tne party had 
started, having been in Boston allegedly meeting with A&F Commissioner Dwight 
about the UMass/Bostcn contract. 307 According to MBM Vice President Jac* 
Thomas, who also was present at the MBM Christmas party in New York, Mansueto 
received several telephone calls during the party. 308 Mansueto allegedly tola 
Thomas and others that the calls were from Endicott Peaoody, who was in Boston 
"keeping close tabs" on the final selection process for the UMass/Bos ton 
contract. 309 Peabody allegedly made several calls to report wno was in the 
lead and finally told Mansueto that MBM had definitely been awarded the 
contract. 310 MBM salesman Ivan Soskel also recallea, in 1980, that he learned 
during the MBM 1969 Christmas party that MBM nad won the UMass/Boston 
contract. 311 Moreover, Martin Heyman has remembered having heard that MBM won 
the contract during a small Christmas party for MBM staff held in Boston on tne 
same dav.312 in addition, Anthony Mansueto testified to the Post Audit 
Subcommittee that he learned of the contract award during tne 1969 Christmas 
partv. 313 

Endicott Peabodv's records from 1969 reflect four telephone calls to or from 



306 Mansueto pocket diary, 12/19/69; Mansueto December 1969 calendar; JacK S. 
Thomas December 1969 calendar. 

307 Written statement dated December 14, 1979 and executed by Jack S. Thomas, 
concerning the December 19, 1969 MBM Christmas party and the December 22, 1969 
kick-off meeting held by the BBC. See discussion supra about the alleged 
Dwight-Heyman-Mansueto meeting on December 19, 1969. 

308 Thomas statement, suora . n. 307. 

309 id. 

310 Id. 

311 A/30/80 interview of Ivan Soskel by Special Commission staff. 

312 Heyman 8/23/80 affidavit, at 2. 

313 Mansueto testimony, P. A. 5/23/78 at 18-19. Mansueto incorrectly 
remembered the date of the Christmas party. 



80 

New York and four calls to or from Boston on December 19, 1969 regarding 
MBM.314 Some of those calls, according to Peabody, were to Mansueto and 
Heyman.315 Peabody testified that his meeting with Dwight's deputy, Albert 
Zabn'skie, mav have occurred on Oecemoer 19, 1969 and that he probably reported 
the results o f that meeting in a telephone call to Mansueto. 316 

The evidence that MBM was selected for the UMass/Boston contract on December 
19, 1969 is of interest for several reasons. First, it indicates that Dwight 
made the selection of the winner of this large and unprecedented contract with 
gre3t haste ('since the earliest that Dwight could have received the names of the 
three finalists from the DSB was late in the day on Wednesday, Oecemoer 17, 
1969). Second, it raises further questions about what may have transpired during 
the alleged meeting of Peabodv with Dwight's deputy Zabriskie, and during the 
alleged meeting of Dwight himself with Mansueto and Heyman. Third, it suggests 
that MBM mav have been awarded the contract as a result of some high-level, 
last -minute bargaining or discussion. 

Additional support for the proposition that MBM learned of the contract award 
on Friday, December 19, 1969 comes from MBM ' s participation in the UMass/Boston 
proiect kick-off meeting held at 10 a.m. on Monday, December 22, 1969. we will 
review the evidence about that meeting and then consider Donald Dwight's 
testimonv about how he chose MBM for the UMass/Boston contract. 



314 December 19 [1969] entry in Endicott Peabody's spiral notebook 

315 Peabody testimony, Sp. Comm. 6/19/80 at 115, 121-122. 

316 Id. at 122. 



81 

The "Kick-off Meeting" for 
the UMass /Bos ton Project on 
Monday Morning, December 22, 1969 

On December 11, 1969, Edmund J. McAdam, Jr., BBC project engineer for the 
UMass/Boston project, began arranging a UMass/Boston "kick-off meeting" to be 
held at the BBC offices on Monday, December 22, 1969 at 10 a.m. McAdam sent 
invitations to the architects, the master planner, and the site developer for the 
project. 317 n letter of invitation to MBM (or to any of the other finalists 
for the project management contract) was located in the files of the BBC, the 
university, or MBM. Nonetheless, four MBM staff members attended tne December 
22, 1969 kick-off meeting. 313 Although MBM Vice President Antnony Mansueto did 
not attend this kick-off meeting, the time and place of the meeting were noted 
and crossed out in Mansueto's pocket diary. 319 n representatives of the other 
finalist firms for the project management contract attended the meeting. 320 

MBM Vice President Jack Thomas recalls attending the meeting and says that he 
was informed in advance -- probably on Friday, December 19, 1969 as 






317 See, e.g. , letter dated December 12, 1969 from Edmund J. McAdam to the 
attenTTon oTTrank O'Brien, "Re: Mass State Project U67-4, University of 
Massachusetts, Boston, Massachusetts." 

318 Signed attendance list at 12/22/69 meeting, headed by the name Walter J, 
Poitrast; memorandum dated December 24, 1969 of Jack S. Thomas. 

319 Mansueto pocket diary. 12/22/69. 

320 See signed attendance list from 12/22/69 meeting. 



82 

a result of the calls from Peabody to Mansueto -- that Thomas and other MBM 
emoloyees should go to the kick-off meeting on December 22, 1969.321 
Furthermore, according to Thomas, "there was no douot at the [OecemDer 22, 1969J 
meeting that MBM had previously been selected as project manager. "322 Martin 
Hevman, who also attended the kick-off meeting, also recalls knowing in advance 
o^ MBM's selection. 323 

End ,- cott Peabody's office record lists two MBM-related telephone 
conversations on Sunaay , December 21, 1969, one with Martin Heyman and one with 
Dwiqht's deouty, Albert Zabriskie . 324 if MBM did learn on Friday, December 19, 
l q 69 about winning the contract, it may have occurred to Heyman that it would 
aooear strange for MBM officials to arrive at the December 22, 1969 kick-off 
meeting without Dwight having even notified the BBC of the 



321 Thomas 12/14/79 written statement concerning the December 19, 1969 MBM 
Christmas party and the December 22, 1969 kick-off meeting neld by the BBC. 

322 Id. 

323 Heyman 8/23/80 affidavit, at 2. 

324 Peabodv daily office record, 12/21/69. 



83 

selection. 325 

In 1971, when a legislative committee was investigating MBM ' s UMass/Boston 

;ontract. MBM submitted a chronology 326 stating that MBM learned of its 

selection and attended the kick-off meeting on Tuesday, December 23, 1969.327 

rthat aopears to be an earlier draft of the chronology 328 correctly listed the 

<ick-of r meeting as occurring on December 22, 1969. MBM apparently did not 

submit this earlier draft to the DiCarlo Committee. 

Donald Dwight's Selection of MBM 
as the Winner of the UMass/Boston 
Project Management Contract ■ 

Donald Dwight has testified that he had very little material to consult in 

making his selection of MBM as the firm to receive the first project management 

contract in the history of the Commonwealth . 329 He said that his custom in 

awarding architectural contracts was to consider the amount of work each of the 

finalist firms had done for the state, the geographical locations of the 



325 On 
Decembe 
Thomas , 
rec ited 
provide 
not exp 
it expl 
Dwight * 
at 12:1 
Endicot 
notice 
dated 1 
with Ma 



December 24, 1969, Jack Thomas prepared a file memo describing the 
r 22 meeting. Memorandum for the file dated December 24, 1969 of Jack S. 
concerning "Job No. 459-004 Construction Management Services." The memo 
that it was at this meeting that MBM was informed of its selection to 
project management services for the UMass/Boston project. The memo did 
lain how MBM representatives came to be present at the meeting. Nor did 
ain how the SBC could have known of the selection in order to notify MBM. 
s letter notifying the BBC of MBM ' s selection is date-stamped as received 
8 p.m. on December 23, 1969 -- the day after the kick-off meeting. 
t Peabody wrote notes dated December 22, 1969 indicating that MBM received 
o f its selection "15 m[inutes] before [the kick-off] meeting." Memorandum 
2/22/[1969] handwritten by Endicott Peabody, concerning a conversation 
rt in He vman . 



26 "Chronology of Selection, Appointment, Negotiations and Consummation of 
Contract No. 601, State Project No. U67-4 No. 2A," at 2, prepared by MBM in 
Februarv 1971, This chronology was an attachment to a letter dated February 18, 
1971 from Gerald McKee , Jr. to Senator Joseph J.C. DiCarlo, concerning the 
legislative investigation of the MBM contract. 

327 There was a meeting on December 23, 1969 between the BBC and MBM. It was 
a foilow-uD to the previous day's kick-off meeting. Memorandum for file dated 
December 29, 1969 by Jack S. Thomas. 

328 "Chronology of Important Milestone Dates concerning the UMass/Boston 
Project." found in MBM ' s files. 



329 Dwight testimony, Sp. Comm. 4/14/80 at 11. 



84 

job and of the firm, and the rankings by the DSB. 330 He testified that he did 
not normallv consider technical information since he felt that any firm selected 
as a finalist by the DSB must have been "qualified" for the job. 331 Although 
the names of finalist firms were transmitted to the A&F Commissioner in 
alDhahetical order ov the DSB -- with the effect that the puolic would not know 
how high the OSB had ranked the firm ultimately chosen by tne A&F Commissioner -- 
Dwight testified that he was sent, under seoarate cover, the actual rankings by 
the DSB. 332 

Dw'ght testified that if it had been brought to his attention that one of 
three finalist firms had made a substantial political contribution to the 
Sargent-Dw ight campaign, that fact might have had some influence on his 
decision. 333 Dwiqht also acknowledged that Republican fundraiser Albert 
Manzi "occasionally" made recommendations to him about firms designated 
as finalists by the Designer Selection Board, but Dwight said that he recalled no 
specific instances . 334 

Dwiaht indicated that he had no specific recollection of why he selected MBM 
for the UMass/Boston project management contract. He testified that he had tne 
"dominant impression" that MBM had more project management experience than the 
other finalists, but he did not recall the source of that impression . 335 Dwight 
said that it was possible that Peabody spoke with him on behalf of MBM. 336 



330 Id. 

331 Id. at 14. 

332 Id. at 12-14. 

333 Dwight testimony, P. A. 3/15/78 at 83; Sp. Comm. 4/14/80 at 27. 

334 Dwight testimony, Sp. Comm. 4/14/80 at 18-19. 

335 Dwight testimony, P. A. 3/15/78 at 28-30. 

336 Id. at 48. 



85 

Dwight testified: "I concede it is possible but ... [i]t is my best recollection 

that I don't recall" whether Peabody spoke to him about the contract. 337 

r inally, Dwight testified that if he had been mistaken about having had the 

impression that MBM had greater project management experience, it might have been 

:hat he chose MBM bv "reiving on ... the dart board theory. "338 

Dwiaht's Selection of Haldeman & Goransson 

r or One of the UMass/Boston 

Architectural Contracts 

About two weeks before A&F Commissioner Donald Dwignt selected MBM for the 
project management contract at UMass/Boston, he selected the architects for the 
six buildings to be constructed on the new campus. 339 one of Dwight's 
architectural selections is of some interest and may shed some light on how 
Dwight chose MBM two weeks later. 

The architectural firms submitting proposals were screened by the Designer 
Selection Board in the usual way, and three finalists for each building were 
submitted to Dwight f or his decision. One firm, Haldeman & Goransson, was listed 
as a finalist for three different buildings -- a major academic building 
("College I") and two smaller buildings (the administration building and the 
service/maintenance building). No other firm was a finalist for more tnan two 
buildings. 340 

Haldeman 4 Goransson's success in the DSB came as something of a surprise, at 
least to UMass officials. Several weeks before the DSB ' s vote, Willard W. 
Pr'nce, an architect on UMass's planning staff, prepared a memo for William R. 
("Roy") Hamilton, Jr., the UMass/Boston Vice Chancellor serving as voting 



337 ^d. at 44. 

338 Dwiqht testimony, P. A. 3/15/78 at 62. 

339 See letter dated December 8, 1969 from Donald R. Dwight to Walter 
Poitrast, concerning the appointment of six architects for the six UMass/Boston 
Buildings . 

340 See letters dated November 28, 1969 from DSB Chairman Earle F. Littleton 

to D[onald] R. Dwight, re: Mass. State Projects U67-4 #3 through U67-4 #8, List 
70-1, items 21 through 26, introduced as O'Brien Exhibits 1A through IF, Sp. 
Comm. 6/16/80 at 8. 



86 

representative to the DSB. 341 Prince's memo indicates that the University 

regarded Haldeman & Goransson as unqualified for any of the buildings and that 

the firm was being considered by the OSB only for the two small bu ildings . 342 

However, Prince reported that Haldeman & Goransson seemed to "have some friends 

on the [Designer Selection] Board. "343 

Once Haldeman & Goransson was selected as a finalist by the DSB, UMass 

Planning Director Francis E. O'Brien, Jr. oecame somewhat concerned because 

Haldeman & Goransson did not seem to have any reputation and "seemed to be 

unknown" to most of the people who were contacted by the University in its 

investigation of the various architectural firms. 344 Indeed, O'Brien drafted 

(but did not send' 1 a letter to Commissioner Dwight345 that read in part: 

"It is surprising that Haldeman and Goransson appeared on 
the DSB list at all, when one looks at the many firms with 
national reputations who expressed an interest in one or more of 
the University buildings at Columbia Point. Haldeman and 
Goransson have no reputation at all...." 

Haldeman & Goransson's success with the DSB was somewhat tenuous: the firm was 

ranked third ( i.e. , last among the finalists) in the DSB voting for each of the 

buildings for which it was a finalist. 346 

On Friday, November 28, 1969 -- two days after the DSB voting -- FredericK J 

Kussman, assistant to the 8BC Director, allegedly called David Wallace of the 

architectural firm Geometries, which was ranked second by the DSB for the 

administration building. Kussman allegedly suggested that if Geometries were 



341 Handwritten [October 23, 1969] memorandum from "Will" [Willard W.] Prince 
to "Pov" [William R.] Hamilton, re: "Selection of Architects - Columbia Point," 
introduced as Hamilton Exhibit 1, Sp. Comm. 6/16/80 at 5-6. 

342 See Hamilton testimony, Sp. Comm. 6/1/80 at 7-8. 

343 Prince [10/23/69] memorandum to Hamilton at 2. 

344 O'Brien testimony, Sp. Comm. 6/16/80 at 9-10. 

345 Handwritten letter dated December 10, 1969 from Francis E. O'Brien, Jr. to 
Donald [R.] Dwight, concerning the selection of Haldeman & Goransson as architect 
for College I. The letter was not sent. 

346 O'Brien testimony, Sp. Comm. 6/16/80 at 11. 



87 
interested in working on the administration building, it should consider a joint 
venture with the third-ranked firm, Haldeman & Goransson . 347 Shortly 
afterward, Wallace was allegedly called by Haldeman & Goransson's President 
Nathan Weiner and a meeting to discuss the matter was arranged for December 1, 
1969. Wallace, however, allegedly became uneasy, presumably because it seemed 
unusual to suggest a joint venture at that stage -- after the DSB had determined 
that each of the finalist firms was qualifiea on its own. 348 Wallace felt 
sufficiently uneasy that he telephoned Willard Prince of the UMass planning and 
development office. Prince reported the conversation to Planning Director 
O'Brien, who thought the proposal from Kussman was "strange," "unusual," and 
" i rregular . "349 O'Brien wondered if the call to Wallace might be part of a 
pattern. Since O'Brien kne* that Haldeman & Goransson also ranKed thiro on the 
supply /ma intenance building, he asked Prince to call J. Timothy Anderson, wnose 
firm had been ranked second on that building. Anderson allegedly would neither 
confirm nor deny that he nad received similar calls from Kussman and Weiner; 
"Anderson would only say that he heard 'something funny' was going on and spent 
an uneasy weekend as a result. "350 

As a consequence of these events, O'Brien drafted a strongly-worded letter to 
Dwight askinq "What the deuce is going on, if any thing?"351 O'Brien decided 
not to send the letter as a result of a discussion with Hamilton, who told 



347 i_d. at 11-12: draft letter dated December 2, 1969 from Francis E. O'Brien, 
Jr. to Donald [R.] Dwight, concerning the proposal by Kussman of a joint 
venture. The letter was not sent. 

348 O'Brien 12/2/69 draft letter to Dwight; O'Brien testimony, Sp. Comm. 
6/16/80 at 12. 

349 O'Brien 12/2/69 draft letter to Dwight; O'Brien testimony, Sp. Comm. 
6/16/80 at 14. 

350 O'Brien 12/2/69 draft letter to Dwight. 

351 Id. 



88 

O'Brien that he wouH take up the matter with Dwight in person. 352 when 
Hamilton did soeak to Dwight, Dwight allegedly said that he (Dwight) was 
surprised at Kussman and that he could not believe that Weiner was involved since 
Weiner was a friend of Dwight's. Dwight allegedly assured Hamilton that Dwignt 
would select the firm ranked first by the DS3 for each building. 353 

Dwight, in fact, did not select Haldeman & Goransson for the administration 
building or for the supply /maintenance building. But, in UMass's view, he did 
something worse: he chose Haldeman & Goransson for the much larger College I 
building, which happened to be the one building that UMass had not checked 
about. 354 Hamilton reacted with "certainly a lot of surprise and some dismay" 
on learning of the select ion . 355 O'Brien drafted another letter to Dwight, 
this one even more "steamy," but he did not send this letter either, apparently 
regardinq the cause as lost. 356 

The university's fears were borne out, according to Hamilton. Haldeman & 
Goransson's College I building presented the university with "perhaps more 
problems than any other single building" on the new campus, according to 
Hamilton's test i* monv . 357 j|-, e university's planning and development staff "put 
in an inordinate amount of time assisting those designers to get the building 
design together . " 358 Furthermore, serious operational problems existed with 
the heating, ventilation, and air conditioning systems, with roof leaks, and with 
other aspects of the College I building. 359 

Dwight's selection of Haldeman & Goransson occurred just two weeks oefore 
Dwight selected MBM for the UMass/Boston project management contract. 



352 O'Brien testimony, Sp. Comm. 6/16/80 at 15-16. 

353 Id. at 16: O'Brien 12/2/69 draft letter to Dwight. 

354 Letter dated December 8, 1969 from Donald R. Dwight to Walter Poitrast 

355 Hamilton testimony, Sp. Comm. 6/16/80 at 12. 

356 O'Brien testimony, Sp. Comm. 6/16/80 at 18. 

357 Hamilton testimony, Sp. Comm. 6/16/80 at 12. 

358 Id. 

359 Id. at 12-13. 



89 

Governor Francis W. Sargent's 
Knowledge or Lack of Knowledge 
of the Award of the UMass/Boston 
Project Management Contract 

Endicott Peabody has testified that he met with then Governor Francis W. 
Sargent on November 24, 1969 -- approximately one month oefore MBM won the 
UMass/Boston contract -- and that Peabody may have mentioned MBM to Sargent and 
mav have billed MBM for time Peabody spent in the meeting with Sargent. 360 
Peabody did not testify that he did tell Sargent aoout MBM or that he did bill 
MBM for such a discussion. Rather, Peabody testified that he "would not have 
[had] any reluctance" to do those things, and that he therefore would not rule 
out the possibility that he had done so. 361 

Francis Sargent has acknowledged, in testimony to the Commission, that he met 
with Peabodv "maybe two or three or four times" wnile Sargent was 
Governor. 362 According to Sargent363 __ 

"Usually [Peabody] came in and talked to me about some 

absurd appointment somewhere in State government that I 

couldn't imagine he would be interested in, or [that] I 

would [be interested in], to tell you the truth. 

As for discussions about MBM, Sargent test i fied : 364 

"I am certain if I had talked with him about that, or if he 
had told me that he was representing a firm and wanted to 
be sure thev got a contract, I would have remembered that. 
I don't remember it, I don't recall it, I don't really 
think it could have happened, because I think I would have 
remembered it, a former Governor coming in and saying I 
represent such and such a firm and want to do this and 
that. ... I feel certain I would remember that. But, I 
have no recollection whatsoever of any such conversation." 

The Commission has no evidence that then-Governor Sargent was involved in any 
way in the selection of MBM to receive the UMass/Boston contract. 



360 Peabodv testimony, Sp. Comm. 6/19/80 at 147-148; see also daily office 
record of Endicott Peabody, 11/24/69; Peabody law firm MBM tub card I, entry for 
U/24/69. ' 

361 Peabodv testimony, Sp. Comm. 6/19/80 at 149. 

362 Test ; mony of Francis W. Sargent, Sp. Comm. 12/10/80 at 72. 

363 Id. 

36/i id. 



90 

MBM Vice President Anthony E. Mansueto's 
Testimony About the UMass Boston Contract 

Before concluding this chapter, it is necessary to discuss certain aspects of 
Anthony Mansueto's testimony about the UMass/Boston contract. Mansueto was 
MBM's Vice President in charge of sales in 1969. Mansueto had devoted 
considerable effort to developing Massachusetts business for MBM prior to 1969, 
and Mansueto has testified that it was he who coordinated MBM's successful 
attemot to obtain the UMass/Boston contract. 365 Mansueto's participation in 
MBM's efforts to win the UMass/Boston contract has been corrooorated by MBM 
President Gerald McKee, Jr . 366 

Mansueto was well acquainted with fundraiser Albert Manzi by 1969,367 3u t 
Mansueto, in testimony before the Post Audit Subcommittee in 1978,368 swore 
that he never discussed the UMass/Boston contract with Manzi prior to MBM's 
obtaining the contract. Further, Mansueto testified to the Post Audit 
Subcommittee in 1978 that an entry "Manzi-Turnpike " in Mansueto's desk calendar 
for December 16, 1969 -- just days before MBM won the UMass/Boston contract -- 
did not reflect a meeting or conversation with Manzi, but rather was an erroneous 
entry that Mansueto's secretary made because she knew that Mansueto was to be in 



365 See , e.g. , Mansueto testimony, 9 DiC 2/4/77 at 5-6. 

366 McKee testimony, Sp. Comm. 6/26/80 at 51-52. 

367 See discussion supra , in Chapter III. 

368 Mansueto testimony, P. A. 6/9/78 at 83-85, 95-96. 



91 



Boston and that Mansueto often saw or called Manzi when Mansueto was in 

Boston. 369 

Further, there is abundant evidence that Mansueto had at least the following 

contacts with Endicott Peabody in the pursuit of the UMass/Boston contract: 
Mansueto attended the luncheon on October 1, 1969 in New York 
with Peabody, Lambert, and McKee at wnich Peabody was asked, 
and at which Peabody agreed, to help MBM in MBM ' s efforts to 
obtain the UMass/Boston contract. 370 

Mansueto attended the October 2, 1969 luncheon in Boston with 
Peabodv, Heyman, Gordon, and Goldings at which Peabody 
explained why UMass (with which Gordon and Goldings were 
affiliated) would benefit from MBM's services on the 
UMass/Boston project. 371 

Mansueto was sent a letter dated October 7, 1969 in which 
Peabody referred to the October 1 and October 2, 1969 luncheon 
meetings, discussed a meeting that Peabody had had with BBC 
Director Poitrast about MBM's interest in the UMass/Boston 
contract, and enclosed minutes of meetings of the UMass 
Buildings and Grounds Committee. Peabody also wrote in the 



369 Mansueto testimony, P. A. 6/9/78 at 87. 

370 See discussion supra . 

371 See discussion supra . 



92 
letter, "If you [Mansueto] will keep me informed as to the 
current status of your negotiations, I will be able to check 
on it weekly. "372 

Mansueto was sent copies of Peabody's letter dated October 29, 
1969 to BBC/DSB official Kussman about MBM ' s interest in the 
UMass/Boston contract. 373 

Mansueto spoke with Peabody on December 3, 1969 about the 
UMass/Boston contract. 374 December 3, 1969 was the day 
when MBM made its presentation to the Designer Selection 
Board. 375 

Mansueto SDOke with Peabody on December 12, 1969 and December 

16, 1969 about the UMass/Boston contract. 376 They 

discussed Peabody's conflict of interest and inability to 

continue representing MBM in regard to obtaining the 

UMass/Boston contract, according to Peabody. ^77 

Mansueto spoke with Peabody on December 19, 1969 about the 

UMass/Boston contract. ^ 7 8 According to Jack Tnomas, 

Mansueto reported that Peabody had told Mansueto the status of 

MBM's application for the UMass/Boston contract, and finally 

the fact that MBM had been awarded the contract. 379 



372 Letter dated October 7, 1969 from Endicott Peabody to Anthony E. Mansueto, 
concerning contacts to be made on behalf of MBM. 

373 A blind copy o f the letter dated October 29, 1969 from Endicott Peabody to 
Fred[erick J.] Kussman was designated for Mansueto. Mansueto apparently also was 
sent, by McKee, a copy of the letter. 

374 Mansueto pocket diary 12/3/69. 
37 5 See discussion supra . 

376 Peabodv telephone records. See discussion supra . See also Mansueto 
testimony, P. A. 5/28/78 at 15. 

377 See discussion supra . 

378 See discussion supra . 

379 Thomas 12/14/79 written statement, concerning the 1969 MBM Christmas party 
and the BBC Kick-off meeting. 






93 
Mansueto attended a December 24, 1969 meeting with Peabody , 
McKee , and Lambert in New York. 380 Mansueto was then sent a 
copy of a letter dated December 26, 1969 from Lambert which 
recounted the agreement discussed at the December 24, 1969 
meeting -- that the Peabody firm would receive $17,500 as a 
fee "for services rendered in connection with obtaining the 
construction management contract with tne University of 
Massachusetts. "381 
The Commission wished to question Mansueto and obtain his testimony 
under oath about these matters, particularly in light of Mansueto's 
prior testimony that he "didn't know Governor Peabody was involved" in 
MBM's attempt in 1969 to win the UMass/Boston contract;382 that 
Peabody gave no assistance whatsoever in securing the UMass/Boston 
contract;383 an d that Mansueto called Peabody in 1969 was because 
Peabodv "was a friend since 1964 ... a personal friend. "384 

The Commission made every attempt to obtain Mansueto's testimony, 
but Mansueto refused to appear and testify before the Commission. 
Mansueto was advised that his refusal to testify violated tne agreement 
that Mansueto (with counsel"* had made in 1978 with the Massachusetts 
Attorney General pursuant to which the Commonwealth granted Mansueto 
non-prosecution status. 385 Mansueto maintained his refusal to 
test 1 f v . 386 



380 Mansueto "Month-At -A-Glance" calendar, 12/24/69; Mansueto testimony, P. A. 
6/9/78 at 129. 

381 Letter dated December 26, 1969 from Jeremiah D. Lambert to Gerald J. [ sic ] 
McKee, Jr. (cc: Anthony Mansueto) re: "revised fee arrangements." 

382 Mansueto testimony, P. A. 5/23/78 at 27. 

383 Mansueto testimony, 8 M/M 2/22/79 at 65. See also Mansueto testimony, 5 
M/M 2/16/79 at 49; P. A. 5/23/78 at 25-27, 31. 

384 Mansueto testimony, P. A. 6/9/78 at 101. See also Mansueto testimony, P. A. 
5/23/78 at 13-15. 

385 Letter dated March 14, 1978 from Massachusetts Attorney General Francis X. 
Bellotti to William F. Looney , Jr. and Paul F. Markham, concerning a 
non-prosecution agreement for Anthony E. Mansueto. 

386 See Sp. Comm. 6/27/80 at 4-5. 



94 

CHAPTER V 

EVIDENCE RELATING TO WHETHER MBM OBTAINED 
THE UMASS/BOSTON CONTRACT THROUGH A 
CORRUPT AGREEMENT 

Introduction 

Since at least 19 71, people have speculated about whether MBM obtained the 
UMass/Boston contract through a corrupt agreement. The Commission, as required by 
law, has conducted an intensive investigation into the matter. 

The Commission received a considerable body of evidence suggesting that MBM 
was awarded the UMass/Boston contract in return for MBM's prior commitment to make 
tens of thousands of dollars of illegal cash payments to fundraisers for the 
gubernatorial administration then in office. The evidence is essentially of four 
types : 

(1) Evidence that it was the practice of the administration to award such 
contracts on that basis; 

(2) Evidence that MBM officials admitted to others that MBM made such a 
commitment, and that a fundraiser for the administration repeatedly 
complained that MBM was slow in living up to its commitment on the 
Utf ass/Boston contract; 

(3) Evidence that MBM' generated tens of thousands of dollars in cash for payment 
to politicians; and 

(4) Evidence that MBM paid tens of thousands of dollars in cash to a 
fundraiser for the administration after MBM won the UMass/Boston 
contract. 

The Commission did not receive direct testimony of such an agreement from any 
participant in regard to the MBM-UMass/Boston contract. The man who awarded the 
contract to MBM refused to testify and stayed out of Massachusetts in order to avoid 
service of process which could have compelled him to testify. The MBM official who 
coordinated MBM's efforts to win the contract did the same. The fundraiser alleged 
to have exacted and followed up on the commitment spent weeks attempting to persuade 
courts to permit him to avoid complying with validly served Commission summons and 
then, after losing the legal battle, finally appeared before the Commission and 
asserted his constitutional privilege against self-incrimination. 

The Commission was mandated by law not only to investigate the award of the 

MBM-UMass/Boston contract but also to file a public report of the evidence produced 

by the investigation. Accordingly, the present chapter sets forth the four types 

of evidence outlined above. 

Evidence That Contracts Were Awarded by the Volpe and Sargent 
Administrations in Return for Prior Commitments By the Winning 
Firms co Make Illegal Cash Payments 

In addition to investigating MBM's activities in Massachusetts, the Commission 

has investigated ways in which other contracts were awarded by the Commonwealth during 



95 

the time frame applicable to MBM's UMass/Boston contract. Other portions of this 
Final Report discuss in depth the evidence from those other investigations. For 
present purposes, one of those other cases -- the "DMJM" case -- will be summarized 
briefly (and without footnotes) . The DMJM case is related to the MBM case for 
reasons that will become apparent. Readers are referred, for further information, 
to the detailed treatment of the DMJM case elsewhere in this Final Report and also 
to the discussions of the awarding of such contracts as the ones for the Connelly 
School and the Gentile School. 

DMJM — the architectural firm Daniel Mann Johnson & Mendenhall -- was selected 
on July 9, 1968 by A & F Commissioner Anthony P. DeFalco as the winner of a contract 
to design a new campus for the Holyoke Community College. DMJM received a "continued 
services" contract in October 1972, through the approvals of BBC Director Walter J. 
Poitrast, A&F Secretary Robert L. Yasi, and Transportation & Construction Secretary 
Alan Altshuler. Pursuant to those contracts, DMJM to date has received approximately 
$1.7 million in fees. 

According to testimony before the Commission, DMJM was selected for the 
contracts as the result of an arrangement that DMJM made with Albert Manzi, a fund- 
raiser for Governor John A. Volpe and for Volpe's successor Francis W. Sargent. 
Testimony and documentary evidence presented to the Commission indicate that DMJM 
gave at least $36,000 in cash to Manzi pursuant to a commitment by DMJM to make 
such illegal payments in return for receiving the Holyoke Community College work. 

In brief, the evidence is as follows. DMJM was interested in 1968 in receiving 
the architectural contract for the new Holyoke Community College campus that was to 
be built. As an out-of-state firm, DMJM had been unsuccessful in pursuing other 
Massachusetts state contracts and recognized that its chances for the Holyoke 
Community College contract would be enhanced if it could link itself with a firm 
based in Massachusetts. DMJM's lack of success in seeking Massachusetts state 
contracts on its own was not unique; some 97 percent of the finalists selected by 
the state's Designer Selection Board for architectural contracts had been Massachusetts 
firms. 

DMJM asked for assistance from the Worcester architect Frank R. Masiello, Jr. 
Masiello was well-connected politically and had been successful in obtaining 
Massachusetts state contracts. DMJM offered Masiello consulting contracts in return 
for Masiello 's assistance in making the necessary introductions and arrangements 
for the Holyoke Community College contract. 

Masiello felt that DMJM was clearly qualified for the contract and should be 



96 
able to obtain it on the merits with the aid of introductions to responsible 

officials at the Massachusetts Bureau of Building Construction and Office of 

Administration & Finance. But shortly after a Masiello-arranged meeting of DMJM 

officials with A&F Commissioner Anthony P. DeFalco — who had the legal authority 

for awarding the Holyoke Community College contract — Masiello received a telephone 

call from Republican fundraiser Albert P. ("Toots") Manzi. Manzi summoned Masiello 

to Manzi 's Worcester grocery store. After meeting at the market, Manzi and 

Masiello drove to an ice cream stand where Manzi berated Masiello for trying to 

help DMJM win the Holyoke Community College contract behind Manzi 's back. Manzi 

told Masiello that if DMJM wanted to win the contract, it would have to make a 

large political contribution. Masiello testified to the Commission that he 

"understood [Manzi] to mean that the political contribution 
was a guise of a payment of money to obtain a contract for 
which a firm was under consideration..." 

Masiello testified further that he had obtained contracts for the Masiello 

architectural firm pursuant to such arrangements with Manzi on prior occasions. 

Aware of Manzi' s power to influence the award of architectural contracts by 
the administration, Masiello advised the DMJM firm that Manzi could control the 
fate of the Holyoke Community College contract depending upon whether DMJM would 
meet Manzi 's demands. DMJM decided to pay for the contract but asked Masiello to 
negotiate with Manzi so that DMJM could pay less than the $70 , 000- $80, 000 that Manzi 
had intially demanded. After discussions between Manzi and Masiello, Manzi agreed 
to accept $22,000 from DMJM, so long as the money came in cash. The money would be 
paid in installments, starting after DMJM received its first fees from the Holyoke 
Community College contract. DMJM agree!, and the initial contract was awarded by 
A&F Commissioner DeFalco. 

For reasons not necessary to detail here, Manzi eventually demanded more 
money from DMJM, and successive agreements were reached to increase the total 
payments first from $22,000 to $27,000, and then to 5% of DMJM's fees on the project 
(for a total of at least $65,000). 

The Commission received evidence that DMJM paid at least $36,000 in cash to 

Manzi between 1969 and 197 2. The payments were as follows, according to testimony 

and documents: 

- $5,000 in April 1969, by means of a DMJM check to Masiello, 
with the proceeds of the check being delivered in cash by 
Masiello 's brother to Manzi at the Massachusetts Turnpike 
Authority. (Manzi was a member of Turnpike Authority, having 
been appointed by Governer Volpe.) 






97 

- $6,000 in the fall of 1970, delivered in $5-bills by DMJM's Barry 
Mountain to Manzi at Manzi's market. Masiello's brother later 
converted the cash into larger denomination bills, while Manzi 
waited in an automobile outside the bank. 

- $15,000 on January 17, 1972 in the form of five $3,000 cashier's 
checks handed by Mountain to Manzi in the presence of Masiello's 
brother. 

- $10,000 on November 7, 1972, by means of cash given by DMJM's 
Stanley Smith to Masiello's brother to Manzi. 

The long hiatuses between these payments angered Manzi, who made dunning 
telephone calls to Masiello, threatening to hold Masiello responsible for commitments 
not met by DMJM. When Manzi could not reach Masiello, he called Masiello's brother 
with similar messages. The pressure became so intense that Masiello's marriage was 
jeopardized and Masiello finally moved to Florida. 

As discussed in the ensuing sections of this chapter, there is substantial 
evidence that the same pattern was followed with regard to MBM and the UMass/Boston 
project management contract. Several witnesses testified to the Commission of 
hearing from MBM officials and from Manzi that MBM had a commitment to make cash 
payments to Manzi in relation to the UMass/Boston contract. MBM officials and other 
witnesses testified of dunning telephone calls and heated meetings in which Manzi 
demanded that MBM keep its commitments. Moreover, MBM officials and another witness 
testified that MBM did in fact pay Manzi tens of thousands of dollars in relation 
to the UMass/Boston contract. In addition, the Commission received evidence that 
MBM obtained contracts in other states in return for similar commitments. 

Before turning to these other types of evidence, it should be mentioned that 

MBM received a subcontract from DMJM to provide cost estimating services on the 

1 
Holyoke Community College project. It should also be noted that on July 24, 1968 — 

two weeks after DMJM won the architectural contract for Holyoke Community College -- 

2 
MBM Vice President Mansueto wrote to his assistant: 

"I spoke to [Frank ] Masiello on Monday July 22, and he advised me 
of the following: 



1 
See , e.g . , letter dated July 29, 1969 from BBC Director Horace M. Chase 
(signed by Acting BBC Director Walter J. Poitrast) to Daniel Mann Johnson 
& Mendenhall approving DMJM's request to employ MBM for estimating on the 
Holyoke Community College project. 

2 

MBM internal memorandum dated July 24, 1968 from Anthony E. Mansueto to Ivan 
Soskel re: "Massachusetts and other considerations." 



98 

"1. DMJM has been requested through our Massachusetts political 

friends to use MBM on their new Holyoake [ sic ] College project... 
BBC will soon be advised that we are to be the cost consultants 
for this project. Frank M. suggests that we wait until after 
July 29 before we approach BBC on their CPM program, since our 
political friends will be talking to the BBC prior to that time... 

"2. I get the general impression from Frank Masiello that we are 
being pushed by the State people and some of the work that we 
have got is not as coincidental as it might seem - people are 
being asked to use MBM ..." 

Beyond the DMJM architectural contract, there is considerable other evidence 

that the Commission received of the awarding of contracts by the Volpe and Sargent 

administrations as a result of corrupt agreements. Such evidence is discussed 

elsewhere in this Final Report. 

Evidence that MBM Officials Admitted to Others That MBM 
Made A Commitment to Pay Cash to Manzi in Connection 
With the UMass/Boston Contract, and that Manzi Repeatedly 
Complained that MBM Was Slow in Living Up to Its Commitments 

on the UMass/Boston Contract 

Several witnesses provided the Commission with testimony that MBM made 

a commitment similar to the one just described as to DMJM, and several witnesses 

testified that Manzi repeatedly complained that MBM was slow in living up to such 

commitments in regard to the UMass/Boston contract. Indeed, two witnesses testified 

that Manzi linked MBM with DMJM in Manzi' s complaints about firms that had made, 

but were slow in meeting, such commitments. 

Testimony of 

Frank R. Masiello, Jr. 



Frank Masiello testified before the Commission that he introduced MBM Vice 

3 
President Anthony Mansueto to fundraiser Manzi in October of 1967. At some time 

thereafter, according to Masiello, Manzi called Masiello and asked "whether or not 

[Mansueto] would be willing to make a political contribution if he was asked and 

4 
would he follow through on his commitment." Masiello testified that he vouched 

for Mansueto, based upon Masiello 's knowledge that "during the days of the Peabody 

Administration . . . when [Mansueto] was asked to make political contributions he did 

5 
in fact make them. " 

6 
In May of 1971, according to Masiello's testimony, Masiello was attending 



Testimony of Frank R. Masiello, Jr., Sp.Comm. 3/25/80 at 117. See also discussion 
in Chapter III, supra . 

4 Id. 

5 Id. 

6 Masiello testimony, Sp. Comm. 6/16/80 at 31-33. 



99 
a meeting of the Massachusetts Board of Registration of Architects, of which Masiello 
was a member. He received a telephone message to call Manzi at the Governor's office. 
He called Manzi there, and Manzi asked Masiello to meet Manzi at a drug store/ 
luncheonette across the street from the State House. When they met, Manzi complained 
that Masiello 's friends at MBM has made a commitment on the Columbia Point [UMass/Boston] 
project but that MBM was not living up to the commitment. During the same conversation, 
Manzi complained that DMJM, whom Masiello also had vouched for, was not meeting its 

8 Q 

commitments either. According to Masiello s testimony 7 — 

" [Manzi] said those deadbeat friends of yours are not living 
up to their commitment, and he said if Tony [Mansueto] 
persists in going this route, he's going to have some problems 
in Massachusetts on his contracts. He said I would like you 
to get in touch with him and express to him my feelings and 
press upon him how important it is that he live up to the 
commitments he's made to us. He says I am under severe 
pressure from the Governor's campaign fund committee to get 
these funds in, and he says Tony made a commitment and like 
your DMJM friends they ought to keep it or he ought to keep it." 

Masiello testified that he was personally upset and concerned by this conversation 

with Manzi, because Manzi indicated Manzi was holding Masiello personally 

responsible for the failure of Masiello 's "friends" — MBM and DMJM — to live 

10 
up to their commitments. 

Therefore, Masiello telephoned Mansueto and relayed Manzi 's message, according 

1 1 12 

to Masiello 's testimony t Masiello further testified that Mansueto said 

"Well, I will take care of the commitment, but we're having 
problems internally and I will discuss it when I see you in 
person. " 

Masiello testified that he met with Mansueto on the following day at 

MBM's New York office. According to Masiello 's testimony 

"I went in, and after going through the formalities of hello, how 
are you, I think I outlined to him exactly what Manzi told me, that 
there had been a commitment that Tony made, a commitment to pay a 
sum of money to the Sargent campaign and that it wasn't being 
kept. They weren't getting their payments. They were not living 
up to the schedule, and Tony admitted yes, he had a commitment he 
had made and they were having internal cash flow problems at the time 
and just as soon as the matter was resolved they would in turn take 
care of it and get caught up with [the commitment]." 

Despite this conversation in 1971, however, Masiello received calls in 1972 

about MBM still not having met its commitments to Manzi, according to Masiello 's 



7 Id. at 33. 

8 Id. at 31-32; Sp.Comm. 3/26/80 at 118-119 

9 Id., Sp. Coram. 6/16/80 at 31-32. 

10 Id. at 34-35. 

11 Id. at 32. 

12 W. 

13 Id. at 35-36. 



100 

14 
testimony. Manzi, by this time, was calling Frank Masiello's brother William, 

and William was relaying the messages to Frank, according to Frank Masiello's 

testimony. For example, in October 19 72, according to Frank Masiello 

"Bill [Masiello] was still telling me that Tony [Mansueto] wasn't 
or MBM or Tony or both weren't keeping their commitments that 
they made to Manzi, and that they were way behind in catching up, 
and promises that he had made to me earlier that they would get 
caught up in their commitments had never been kept, and Billy was 
constantly reminding me of the fact that my friend Mansueto wasn't 
keeping his word. . . " 

And, by December of 1972, according to Frank Masiello's testimony 

"I got a very long, loud harassment type of call from Bill jumping 
all over me about Mansueto not keeping his word, still wasn't 
keeping his word. He was creating problems and straining [Bill's] 
relationship with Manzi and that because of that [Bill] was afraid 
that the company he bought from me, the contracts might not be 
honored and so forth and so on. He was on about having Tony take 
care of these commitments." 

At around this time, Frank Masiello had additional reason to be upset with Mansueto, 

Masiello had given MBM entree to the annual dinner of the Big Brothers in 

Washington, D.C. which was attended by many high government officials. MBM was 

embarrassing Masiello by being months late in paying for its table at the dinner. 

18 
Moreover, MBM and the Masiello firm were in a dispute over billings. Masiello 

finally wrote Mansueto, on the bottom of a bill that MBM had sent to the Masiello 

firm 19 — 

"Tony: We're still going around on this. By the way do you ever 
read my letters carefully? It's a year now and Big Brothers still 
haven't received your check for last year though you sent a very 
warm promise type letter to me in September promising payment by 
Oct. 1, 1972. Bill tells me your performance in Mass. is equally 
gratifying . " [Emphasized words were triple-scored in original.] 

20 
Masiello explained, in testimony to the Commission, about the note to Mansueto: 

"I guess looking back at it, I guess that was my sarcastic way of 
telling Tony that the members of his firm weren't at any time valued 
because they couldn't keep a commitment to a charitable organization, 
to the Big Brothers, they wouldn't keep a commitment there and from 
the phone calls and conversations I had with Bill, it seemed that they 
were doing the same thing on the political level as well as on the 
charitable level . " 



14 Id. at 38-39, 45. 

15 Id. at 46. 

16 Id. at 49. 

17 Id. at 42-44 

18 Id. at 47. 

19 

MBM Statement dated 10/31/72 to MBM-MAA Florida Prison Study c/o Masiello 

20 Masiello testimony, Sp. Comm. 6/16/80 at 48-49. 



101 

Testimony of 
William V. Masiello 

Frank Masiello 's testimony was corroborated by testimony of William V. Masiello 

before the Commission. William Masiello testified that Manzi started complaining 

21 

about MBM and DMJM as early as the fall of 1970: 

"It was during the election 1970.... I had reason to go to the 
Sargent headquarters on Park Avenue in Worcester.... Mr. Manzi 
pulled me aside and indicated to me that both MBM and DMJM were 
behind in their commitments. He totally blamed my brother Frank. 
He blamed Frank saying that he brought — Frank brought MBM and 
DMJM into the Commonwealth and they were both deadbeats . " 

22 
According to William Masiello, Manzi said that MBM and DMJM "hadn't fulfilled 

their part of the deal that they had made to acquire contracts." 

As discussed below, MBM officials admit that they paid Manzi $10,00 in cash 

in mid-October of 1970. 

In addition to testimony about Manzi' s complaints after MBM won the UMass/ 

Boston contract, William Masiello testified about a meeting with MBM's Anthony 

Mansueto and with Frank Masiello at Nick's Grill in Boston in late 1969 — the year 

23 
that MBM won the UMass/Boston contract. According to William Masiello 's testimony 

"the basic conversation was that Mr. Mansueto — well, MBM was to 
pay Toots Manzi five percent of their [fixed] fee for the [u/Mass] 
contract. " 

During the conversation, it was mentioned that MBM would be paying Manzi in cash 

? 4 
according to Masiello 's testimony. Further, the word "launder" was mentioned and, 

25 

according to William — 

"[A]fter the meeting I asked Frank [Masiello] when we were alone 
what the word laundered meant and he explained to me what the 
word meant, covering up cash, how to get money through the 
company so it couldn't be detected either by IRS or any of the 
other government agencies." 

William Masiello also testified about a face-to-face meeting in May of 1972 

at which Manzi complained directly to MBM President McKee and MBM Vice President 

Mansueto (in Masiello' s presence) about MBM's failure to live up to its "commitments." 

Tnat testimony is discussed later in this chapter, along with testimony by McKee and 

Mansueto acknowledging that there was such a meeting and that Manzi complained about 

MBM not meeting its "commitments." 



21 

Testimony of William V. Masiello, Sp. Comm. 6/24/80 at 48. 

22 Id. , 5/12/80 at 33. 

Id. 6/24/80 at 7-8. 

24 

Id . at 8. Frank Masiello did not testify about such a meeting. Cf . testimony of 

Frank Masiello Jr., Sp. Comm. 6/16/80 at 34. 
25 Id. at 8-9. 



102 

Testimony of 
Daniel J. Shields 

26 
Daniel Shields, an MBM official from 1971 to 1973, testified that MBM 

President McKee characterized Albert Manzi as a "five percenter," which Shields 

understood to mean a person who would receive 5 percent of a contract's value if 

27 

his efforts helped in winning the contract. Shields further indicated that he 

28 
learned from McKee that Manzi had helped MBM win the UMass/Boston contract. 

Testimony of 

William F. Harding 

29 
William F. Harding, an MBM salesman from 1971 to 1974, testified that he learned 

that Mansueto had made a commitment to a person in Worcester that MBM would make a large 

political contribution — probably about $200,000 -- to Governor Sargent's campaign if MBM 

were awarded the UMass/Boston contract. Harding was unsure who told him this, although 

he suggested that it might have been Shields who might, in turn, have learned it from 

McKee. According to Harding, only $40,000 to $50,000 of the promised "contribution" was 

32 

paid, and the fundraiser was dissatisfied. 

Testimony of 
Stanley Davis 

33 
Stanley Davis was an employee in 1969 of Seelye Stevenson Value & Knecht, the firm 

that made — and then dropped out of -- a joint venture proposal with MBM for the UMass/Bos.i 

34 

contract. Davis testified to the Commission that he was told by William Knecht, the head 

of the Seelye firm in 1969, that payoffs or political contributions in the range of $50,00C 
to $150,000 were going to be required to obtain the UMass/Boston contract. Davis said that 
he does not recall if he was told that the $50,000 - $150,000 was to be the total payoff 
from McKee or Mansueto (Davis did not recall which), and that Knecht 's unwillingness to 

participate in such an arrangement caused the Seelye firm to withdraw from the proposed joi 

35 

venture. The Commission could not obtain Knecht' s testimony, since Knecht died several 



years ago. 

MBM President McKee disputed Davis's account when McKee testified before the Commissi 
McKee said that a former Seelye employee named William Alexander would corroborate McKee ' s 
testimony that Seelye withdrew from the venture when, and because, the DSB split the site 



. 



26 

Shields testimony, Sp.Comm. 6/2/80 at 8. 

27 Id. at 95-96. 

28 Id. at 93-94. 

29 

See Chapter X, infra . 

30 Harding testimony, Sp. Comm. 6/4/80 at 26-27, 29. 

31 Id. at 27-28. 

32 Id_;_ at 28. 

' Testimony of Stanley Davis, Sp. Comm. 5/29/80 at 22-23 

34 

See discussion in Chapter IV, supra . 

' Davis testimony, Sp. Comm. 5/29/80 at 24-25. 



103 

36 
development work from the project management contract. McKee was asked orally at the 

11 38 

hearing, by formal letter after the hearing, to provide Mr. Alexander's address so that 

the Commission could contact him. McKee never responded to the requests. 

It should be noted that Stanley Davis worked briefly for MBM in 1970-71 

39 

and left due to policy conflicts. On the other hand, Davis was contacted by the 

40 
Commission in regard to the DiCarlo-MacKenzie case and unexpectedly volunteered 

the unrelated information about the Knecht conversation on two occasions, six 

41 
months apart. 

Davis's testimony is, of course, hearsay. It is set forth in recognition of 

the Commission' s responsibility under legislative mandate to report fully all 

evidence regarding the means by which MBM obtained the UMass/Boston contract. The 

Commission, as elsewhere in this report, makes no finding of credibility. 

Affidavit of 
Maurice Khoury 

Maurice Khoury was the Chairman of the Board of International Management 

42 
Services, MBM's parent company, for several years in the early 1970's. In a 

sworn affidavit, dated June 24, 1980, Khoury stated that McKee told him "that large 

amounts of money had to be paid to government officials in order for MBM ... to 

receive or retain particular contracts." Khoury stated that McKee told him that 

large payments of this nature were required "for obtaining or retaining a contract 

at or for the University of Massachusetts Boston campus. On one occasion, for 

example, Mr. McKee told [Khoury] that $20,000 was necessary for that purpose." 

Khoury added that he provided of f-the-books cash for payments of this type at 

McKee ' s request. Khoury' s affidavit and McKee ' s denials are considered at length 

later in this chapter. 

Evidence That MBM Generated 
Tens of Thousands of Dollars in Cash 
For Payment to Politicians 

The Commission received considerable evidence, much of it from testimony by 

MBM officials and from documents found in MBM's files, that MBM generated tens of 



McKee testimony, Sp. Coram. 6/26/80 at 135. 

37 Id. at 143-144. 

3 8 

Letter dated June 26, 1980 from Bancroft Littlef ield, Jr. to James F. Ryan, counsel to 

McKee . 

39 Davis testimony, Sp.Comm. 5/29/80 at 6. 

40 See discussion in Chapter VII, infra . 

41 Notes of Stanley Davis interview 12/11/79 by Commission staff, at 1,3; 5/28/80 Davis intervie 

42 Affidavit dated June 24, 1980 executed by Maurice Khoury in Beirut, Lebanon, at 1. 

43 Id. 



104 

thousands of dollars in cash for payment to politicians. It is important to review 
that evidence in some detail in order to have a basis for evaluating testimony by 

McKee and Mansueto that MBM was not in the practice of making payments to politicians 

44 
or political fundraisers and that MBM did not make a commitment prior to 

obtaining the UMass/Boston contract — or any other contract anywhere else — that 

45 
MBM would make such payments xn return for being awarded the contract. 

Cash Generation and 

Questionable Accounting Practices 

By MBM 

The Commission's analysis of the available books and records of MBM reveals 

at least eight (8) different methods by which MBM concealed the true nature of 

payments that MBM officials have admitted went to politicians or political fundraisers. 

Those methods will be summarized briefly here, each with a specific example of its 

use. In several cases, more complete discussion can be found elsewhere in this 

Report. Here, then, are brief descriptions of the eight methods: 

1. MBM made a corporate check payable directly to a political figure. An 

example is MBM corporate check #1812 for $2,000 made payable in October 1970 to then State 

46 
Senator Kevin B. Harrington. 

2. MBM made a corporate check payable to an intermediary, who then endorsed 
the check to a political figure or political campaign. For example, MBM $2,000 
corporate check #1822 in October 1970 was made payable to William Masiello, who 
endorsed the check to Senator James A. Kelly, Jr., who in turn endorsed the check 

to the Kevin White for Governor Committee. 47 MBM intended this money to go to 

48 
the White campaign. 

3. By prior agreement, bills incurred for services for political figure, a 
political campaign, or a political committee were sent directly to the corporation, 
which paid them as if the services had been rendered to the corporation. Thus, 

in 1972, MBM's wholly-owned subsidiary, MCM, used corporate checks to pay invoices 

submitted to MCM by the Philadelphia Letter Shop, Inc. for printing that was 

49 
actually done for the Philadelphia Democratic City Committee. 



44 McKee testimony, 6 Die 2/1/77 at 51-52; Sp.Comm. 6/26/80 at 97-98. Mansueto 
testimony, 9 DiC 2/4/77 at 100. 

45 McKee testimony, Sp.Comm. 6/26/80 at 14-18, 76-79, 122. Mansueto testimony, 
P. A. 5/23/78 at 110. 

46 See discussion of this check infra and in P. A. Report at 60-79. 

47 See discussion of this check infra and in P. A. Report at 60-72. 

48 Mansueto testimony, P. A. 5/23/78 at 53-55. 

49 McKee testified that he learned about these indirect political payments in 1973 
McKee testimony, 6 DiC 2/1/77 at 184-185. 






105 

4. A corporate check was falsely identified on the company's books as a loan 

to an officer, while the proceeds of the check were actually transmitted to a 

political figure. For example, MBM check #2817 dated January 20, 1972 for $5,000 

was made payable to cash and charged on MBM's books as a loan to McKee. The 

proceeds of this check were given by McKee to Massachusetts State Senator Ronald 

50 
C. MacKenzie. 

5. A corporate check was falsely identified on thecompany 's books as an 
advance to an officer, with the proceeds of the check being transmitted to a 
political figure or political campaign. The alleged October 16, 1970 payment of 

$10,000 to Manzi for the Sargent campaign was cash generated by MBM corporate check 

51 
#1820 identified as an advance to Mansueto. 

6 . A corporate check payable to cash was given to an intermediary who 

negotiated the check and then wrote his personal check to a political figure or 

political campaign. MBM corporate check #2325 for $1,000 dated April 21, 1971 

payable to cash was deposited at the direction of Endicott Peabody into Peabody's 

personal bank account in Washington, D.C. Peabody then wrote a personal check for 

$1,0 00 to buy tickets on MBM's behalf to a testimonial "brunch" for David M. Bartley, 

52 
then Speaker of the Massachusetts House of Representatives. 

7. A corporate check of a company affiliate or subsidiary was made payable 

to cash with the cash given to a political figure or campaign. Half of MBM's 

$10,000 cash payment to Masiello for Manzi on May 23, 1972 was composed of the 

proceeds of a $5,000 check payable to cash, written on the account of Equipment 

53 
Development, Inc., a wholly owned subsidiary of MBM. 

8. A company employee submitted a false expense report on the instruction of 

his superiors, was "reimbursed" by the company, and then used the reimbursement to 

cover personal checks or furnish cash to political figures. Former MCM comptroller 

Peter T. Pallota provided evidence to the Commission that he filed false expense 

reports in 1972 and used the "reimbursements" to generate cash which was given 

54 
to certain political figures in accordance with directions from his superiors. 

In each of the foregoing methods, corporate funds were conveyed to 

55 
politicians or political campaigns. Such contributions have been illegal in 

56 

Massachusetts since 1946." 



50 See discussion infra . 

51 See discussion later in this chapter. 

52 See discussion infra in Chapter VII. 

53 See discussion later in this chapter. 

54 Notes of 7/25/79 interview of Peter T. Pallotta by Special Commision staff, at 1 

55 For further discussion , see O'Neill testimony, Sp.Comm. 6/25/80. 

56 See G.L. , c. 55 §. 8. 



106 

57 

MBM had a ledger account entitled "Political Contributions." The Commission, 

58 
despite intensive investigation, did not find a single entry in that account, 

even though MBM's check vouchers for some of the political payments admitted by 

59 
MBM officials contained the notation: "Political Contribution." 

Another method for generating cash was alleged by Maurice Khoury, the 
Chairman of the Board of MBM's parent corporation for several years in the 1970s. 
That procedure is discussed later in this chapter. Before turning to it, some 
general comments about MBM's financial records are in order. 

The bookkeeping and accounting procedures that MBM used for the purpose of 
disguising political payments were, in some instances, extremely complicated. A 
brief discussion of them would be confusing, and an extended discussion is probably 
not of much interest to the general reader. Suffice it to say that payments that 
actually went to Massachusetts State Senators Joseph J.C. DiCarlo and Ronald C. 
MacKenzie, for example, gave rise to complex and convoluted entries resulting in 
charges to MBM affiliates in the Middle East. Readers interested in a more detailed 
analysis are referred to the testimony before the Commission of a senior financial 
analyst from the Commission's staff who studied the available books and records 
of MBM and MBM's affiliates. 

For present purposes, the following observations may be helpful. MBM had 
several wholly-owned subsidiaries and one foreign affiliate that it owned in 
conjunction with MBM's parent company,, International Management Services, Inc. (IMS). IMS, 
in turn, had other wholly-owned subsidiaries overseas. A chart creDared by- the 
Commission illustrates the corporate structure. 



57 McKee testimony, 6 DiC 2/1/77 at 64-70. See also O'Neill Exhibit 5, a page 
from MBM's Table of Accounts, Sp.Comm. 6/25/80 at 15. 

58 Testimony of Commission financial investigator James J. O'Neill, Sp.Comm. 
6/25/80 at 19. 

59 See , e.g. , vouchers for voided MBM check #1813 dated 10/19/70 for $2,000 
payable to Kevin White, and for voided MBM check #1821 dated 10/19/70 for 
$4,000 payable to William Masiello, introduced as William Masiello Exhibits 

9 and 11, Sp.Comm. 6/25/80 at 30, 32. 

60 See testimony of James J. O'Neill, Sp . Comm. 6/25/80. 

61 Chart prepared by Special Commission staff from MBM corporate documents. IMS did 
not formally acquire MBM until December 1972, but this arrangement existed d£ facto , 
if not de jure, at least as of April 1972. 



107 







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108 
The Commission, after considerable effort, managed to identify nearly fifty 

different bank accounts used by MEM and its affiliates during the period 1969 

62 
through 1973, and it is entirely likely that additional accounts 

existed. Although the Commission scrutinized more than 10,000 MEM checks, 

there are thousands more that were not available to the Commission . ^ 

Similarly, many of the books and records of MBM and its affiliates were not 

available to the Commission. 65 In addition, the Commission was unable tc 

obtain complete personal banking records of McKee and Mansueto. Thus, the 

Commission could not determine how McKee and Mansueto had disposed of more than 

$200,000 in unrepaid "loans" and "advances" that they had received from MBM. 67 

Thus, there may have been instances of cash generation by MBM that were 

undetectable from the limited records available to the Commission. And, indeed, 

there were several leads that financial analysts for the Commission followed but 



lacked evidence to reach a final determination about 



68 



In an attempt to convince the Commission that there were no other generations 

of cash used for political payments, MEM President McKee had several meetings 

with Commission staff and wrote a letter in which he said: 

"I think the records and documents which you have seen, 
butressed by testimony from the many people responsible for 
the financial and accounting work at MEM, demonstrate that a 
scenario of laundering through these transactions is not 
credible. I call your attention again to the fact that MBM 
certified audits exist for the periods in Question. " 



62 See chart entitled "Partial List of Bank Accounts of MBM and Affiliated 
Companies, 1969-1973," introduced as O'Neill Exhibit 2, Sp. Comm. 6/25/80 at 13. 

63 O'Neill testimony, Sp. Comm. 6/25/80 at 13. 

6^ It may well be that the checks no longer exist. 

65 O'Neill testimony, Sp. Comm. 6/25/80 at 13. 

6 ^ They furnished some, but not all, of the records. See letter dated August 
23, 1975 from Mansueto's secretary Cathy Palkowski tc the Commission; letter 
dated April 2, 19e0 from Gerald McKee, Jr. to National Eenk of North America. 
Their banks apparently no longer have the records, not even on microfilm. 

67 From 1969 through 1972, McKee received $188,041.12 and Mansueto received 
$29,579.57 of "loans" which were not repaid and/or "advances" which could not be 
linked by Commission staff with particular travel or entertainment expenses. See 
chart introduced as O'Neill exhibit 14, Sp. Comm. 6/25/80 at 35, and O'Neill 
testimony, id . at 32-37. 

6£ The Commission is not suggesting that any payments to politicians were made 
in connection with a series of $6,600 and $7,500 checks that attracted attention 
in the public press some years ago. The Commission investigated those checks 
intensively end found no evidence linking those checks to illegal political 
payments. See O'Neill testimony, Sp. Comm. 6/25/8C, at 45-49. 

^ McKee interviews with Commission staff on Auoust 30, 1979, February 5, 1980 
and April 3, 1980. 



70 



Letter dated August 25, 1980 from Gerald McKee, Jr. to the Commission 



109 
The Commission sought corroboration of this from Arthur 0. Hirshberg, the 

certified public accountant with Laventhol & Horwath who had been involved with 

the yearly audits of MBM back at least to 1969. Hirshberg disagreed with McKee's 

letter and summarized his disagreement in a memorandum which Hirshberg submitted 

to the Commission on Laventhol & Horwath's behalf. The memorandum began by 

citing relevant sections of the Codification of Statements on Auditing Standards 

issued by the American Institute of Certified Public Accountants' Auditing 

Standards Board (AU Section). Here are some of the sections as ouoted by 

Hirshberg : 

"The financial statements [are] the representations of 
management. The transactions which should be reflected in the accounts 
and in the financial statements are matters within the direct knowledge 
and control of management. The auditor's knowledge of such transactions 
is limited to that acquired through his examination. Accordingly, the 
fairness of the representations made through financial statements is an 
implicit and integral part of management's responsibility." 



"[T]he auditor's examination, based on the concept of selective 
testing of the data being examined, is subject to the inherent risk that 
material errors or irregularities, if they exist, will not be 
detected. .. .Certain acts, such as collusion between client personnel and 
third parties or among management or employees of the client, may result 
in misrepresentations being made to the auditor or in the presentation 
to the auditor of falsified records or documents that appear truthful 
and genuine . " 

The Laventhol & Horwath memorandum concluded with the following comments: 

"It follows from the above that an auditor's unoualified opinion on 
financial statements does not imply that every iterr in the financial 
statements has been verified in detail. The unqualified opinion is on 
the fair presentation of the financial statements taken as a whole. The 
details, accuracy and authenticity of the financial records and the 
financial statements themselves remain the responsibility of management. 

"It should be further noted that Laventhol & Horwath in no instance 
gave an unqualified opinion on the financial statements of 
McKee-Berger-Mansueto , Inc. and Subsidiaries for the years ended April 
30, 1972, December 31, 1973 and December 31, 1974." 



7i Memorandum dated June 17, I960 from Arthur 0. Hirshberg to the Comrrissior 
concerning auditino standards. 



Alleged Cash Generation 
for MBM by Maurice Khoury 



110 



MBM during the 1970s was affiliated with -- and for several years was a 
wholly-owned subsidiary of -- International Management Services, Inc. 
("IMS"). z Because the Commission did not have access tc the books and records 
of IMS and of IMS subsidiaries which might have generated cash for use by MBM, 
the Commission sought to locate IMS's Chairman of the Board, Maurice Khoury. 
Khoury is a native Palestinian who was educated in universities in London and 
Beirut. Commission staff located Khoury in Beirut and interviewed him in 
London in May 1980. Khoury then executed s sworn affidavit for the Commission, 
since he was unable to come to the United States to testify. 

According to Khoury's sworn affidavit, "[MBM President] McKee ... on 
numerous occasions told me [Khoury] that large amounts of money had to be paid to 
government officials in order for MBM and/or MCM to receive or retain particular 
contracts." Khoury swore that McKee had told him about "large payments to 
government officials in return for obtaining or retaining a contract at or for 
the University of Massachusetts Boston campus. On one occasion ... McKee told me 
[Khoury] that $20,000 was necessary for that purpose." Furthermore, Khoury 
asserted, "McKee told me [Khoury] that large payments -- I believe of $100,000 or 
$150,000 -- had to be made to public officials in order for MBM to obtain or 
retain a contract with or for the Chicago Board of Education. I believe that Mr. 
McKee said that $50,000 had to be paid in advance of obtaining the contract and 
the rest later." In addition, according tc Khoury, McKee had discussed with him 
"payments to public officials in connection with obtaining or retaining an MCM 
contract regarding the Philadelphia International Airport." 

Khoury's affidavit also included allegations about the sources of funds for 
the political payments that MBM was making. According to Khoury, "on many 
occasions Mr. McKee told me [Khoury] that political payments ... had to be maoe 
in cash and could not be reflected on the books of account of MBM or MCM." 
Furthermore, Khoury stated that "McKee said it was necessary -- if MBM or MCM 
were to obtain or retain those contracts -- that I [Khoury] supply cash or cash 
equivalents to him [McKee] that would not be recorded on the MBM or ^C^ books." 
According to Khoury, he complied with McKee's reouests and instructions to make 
funds available to McKee by employing at least two different methods: 



72 See discussion in Chapter II, supra . 

73 Khoury 5/26/80 interview. 

7/ * Affidavit dated June 24, I960, executed by Maurice Khoury in Beirut, 
Lebanon. 



Ill 

"One method consisted of my writing a check on one of my 
personal bank accounts and making it payable to Mr. McKee 
as an individual. Mr. McKee told me that such sums were 
understood not to be personal loans but rather to be means 
by which political payments could be effectuated. Another 
procedure involved me -- whether personally or through a 
company with which I was affiliated such as Associated 
Business Consultants ("ABC") -- making cash or cash 
equivalents (such as bank checks) available to Mr. McKee 
which would not be processed through any bank account of 
MBM or MCM and would not be reflected on MBM or MCM books 
of account." 

Khoury stated that the procedures making funds available to McKee "often involved 

many thousands of dollars -- even tens of thousands of dollars in a single 

transaction," and that some of these transactions occurred in 1972 and 1973. 

Finally, Khoury said that "[t]o disguise further some [of these] transactions, 

Mr. McKee requested that I [Khoury] execute certain documents such as loan or 

borrowing agreements which did net accurately reflect the nature of the 

transaction." 

In testimony before the Commission, MEM President McKee agreed with many of 

the statements made by Khoury in his affidavit. McKee admitted that from 1971 

through 1973 he and Khoury talked "fairly continuously" about their "mutual 

business." Those discussions between McKee and Khoury took place in New 

York, Lebanon, Algeria, and Kuwait, among other places. McKee conceded that 

Khoury obtained large sums of money for IMS, MBM, and their affiliates both in 

equity investments and in loans -- sums in the hundreds of thousands of 



dollars 



76 



McKee also agreed that Khoury on occasion made checks or wire 



transfers payable to McKee personally, payments that were not reflected on MEM's 
books; however, McKee claimed that these were for expense advances cr for McKee 

79 

to deposit in Khoury's account. In addition, McKee admitted that it was 

"possible" that he and Khoury executed loan agreements which did not accurately 

pn 
reflect the nature of the transactions. McKee further testified that it was 

"ouite likely" that he had tcld Khoury that he [^c\<ee~\ had made large "payments 

... to public officials in the United States in cash," since McKee had indeed 



maoe such payments and testified to them previously 



81 



75 id. 

76 McKee testimony, Sp. Comm. 6/26/8C at 110 

77 id. 

7£ Id. at 110-112. 

79 Id. at 112-113. 

80 id. at 124-125. 
61 Id. at 114. 



112 
McKee denied, however, that he had told Khoury about any such payments other 

than the ones McKee had previously testified about since, according to McKee, 

there were no other political payments. McKee specifically denied having 

told Khoury that large payments had to be made to public officials in order for 

M6M to obtain or retain a contract with or for the Chicago Eoard of Education, 

ft 3 

because "in fact no such payments were reguired to be made." 

McKee further denied that any of the money that was transferred by Khoury to 
McKee personally or to any of MEM's affiliated companies was used for political 
purposes or to make payments or contributions to political figures in the United 
States. He also denied having told Khoury that any of the funds being 
transferred by Khoury to the United States were being used to pay political 



ficures in connection with contracts 



85 



McKee further denied havino had 



discussions with Khoury to the effect that the political contributions had to be 

p c 

made in cash which would not be reflected on the company's books. 

The Commission asked McKee whether he would submit to a polygraph ("lie 

detector") examination. McKee said he would, and a mutually-agreed-upon examiner 

87 
gave the test, using mutually-agreed-upon questions. The examiner was a 

former FEI examiner now in private practice. In order to determine whether 

McKee was lying in denying the substance of Khoury's allegations, McKee was asked 

the following ouestions: 

"Dio Khoury make checks or money payable to you [McKee] 
personally, to pay for contracts in the United States?" 

"Die Khoury make money or its eouivalent available to you that 
did not reflect on MBM ' s books, to buy contracts?" 

"Did you reouest money from Khoury to buy contracts?" 

McKee was tested on these ouestions, answering "No" to all of them. In the 



opinion of the examiner, McKee's answers were untrue 



89 



82 Id. at 115. 

83 Id. at 116-117. 
64 Id. at 113-117. 
S5 id. at 117. 

££ Id. at 123-124. 

87 See letter dated July 12, 198C from Commission attorneys Michael L. Tabak 
and A. John Pappalardo to McKee's attorney James F. Pyan, concerning McKee's 
polygraph examinations. 

88 "Qualifications of Edward J. McGrath," dated October 22, 1980. 

85 Report dated June 9, 1980 of polygraph examination extended to Gerald McKee 
[Jr.] on June 6, 1980, prepared by Edward J. McGrath, staff examiner for 
Scientific Security—Raymond S. August, Inc., at 3. 






113 
The Commission recognizes that polygraph examination is an art and that its 
results are generally not admissible in courts of law. On the other hand, the 
Commission used the same polygraph examiner with other witnesses. and found the 
examiner's conclusions generally to be supported by extrinsic evidence developed 
by the Commission. The Commission reaches no credibility determination and notes 
that McKee later took a polygraph examination that he passed. The examination 
was administered by an examiner engaged by McKee without the Commission's 
knowledge. The examiner was not briefed by the Commission and the Questions were 

en 

not the same as in the first examination. u 

In the course of its investigation, the Commission came upon evidence of 
MBM activities in states other than Massachusetts that tends to corroborate 
allegations in Khoury's affidavit. That evidence is discussed in Appendix B tc 
this MBM Report. 



90 After learning that he had not "passed" the polygraph test administered by 
the mutually-agreed-upon examiner, McKee allegedly told the examiner that McKee 
believed the examiner was incompetent and that McKee was going to ask a former 
FBI agent to recommend a competent examiner. Several days later McKee informeo 
the Commission that a polygraph examiner in New York had found McKee tc be 
telling the truth. See report dated June 24, 1980 of polygraph examination 
extended to Gerald McKee, Jr. by Victor C. Kaufman, New York Lie Detection 
Laboratories; letter dated June 25, I960 from Gerald McKee, Jr. to Special 
Commission Chairman John William Wara, concerning the results of McKee's 
polygraph examinations. The Commission then offered tc make available to McKee's 
New York examiner the "charts" from -- and all the underlying information that 
had been available tc -- the mutually-agreed-upon examiner in Boston. Letter 
dated July 12, 1980 from Commission attorneys Michael L. Tabak and A. John 
Fappalardo tc McKee's attorney James F. Ryan, concerning McKee's polygraph 
examinations. McKee did not act upon the Commission's offer. 



114 

Evidence That MBM Paid at Least $30,000 in Cash 
to Republican Fundraiser Albert Manzi After MBM 
Won the UMass/Boston Contract 

MBM officials have testified that they made two $10,000 cash payments to Republican 

fundraiser Albert Manzi after MBM won the UMass/Boston contract. The testimony of the MBM 

witnesses about those payments is supplemented by new evidence about the circumstances 

surrounding those payments and by evidence of at least one more $10,000 cash payment by MBM 

to Manzi. 

The October 16, 1970 Payment to 
Fundraiser Albert P. Manzi 

91 
Although MBM commenced work on the UMass/Boston project in December 1969, the 

92 

MBM-UMass/Boston contract was not actually signed until April 22, 1970. Thus, MBM did not 

receive any payments from the Commonwealth under the fixed fee portion of its contract until 

93 
April 29, 1970. Once the payments from the Commonwealth started, their fixed-fee component 

94 
ran on the order of $109,000 per month. 

Anthony Mansueto's appointment calendars for 1970 contain notes to call or visit Republic! 

fundraiser Albert Manzi on April 21, April 23, April 27, May 6, June 18, June 22, June 25, 

95 
July 2, July 6, July 13, July 14, July 22, August 10, and August 11. Mansueto's calendar 

for August 17, 1970 carries the entry: "How handle Manzi." It also says, "Call Masiello," 

96 

at a telephone number identified as "Senator Kelly's office." Mansueto's diary 

97 
indicates a contact with Manzi again on September 11, 1970. On September 16, 1970 Mansueto' 

9 8 
pocket calendar says, "Manzi - call FM" [perhaps referring to Frank Masiello]. 

99 
On September 29, 1970, Mansueto's diary contains the entry: "Prog Pol Cont - SB." Thi 

entry may reflect a discussion with MBM Comptroller Samuel Beckerman about political 

contributions. On the same date, Mansueto's diary also says: "Boston. . .Calls : B. Masiello 

& Manzi re 10/13 (10/14? ) I' 100 On October 9 and October 12, 1970, Mansueto's pocket calendar 



q i 

MBM officials attended meetings with the BBC on December 22 and 23, 1969. See discussion 

in Chapter IV supra. 

See Memorandum of Approval #70-80 dated April 22, 1970, signed by Donald R. Dwight. 

1 Comptroller's cards for BBC Project 601, contract No. U67-4#2A, for MBM's project 
management services at UMass/Boston. Payments for reimbursables started on February 
25, 1970. 

94 M. 

' Mansueto pocket calendar, 4/21/70, 4/23/70, 4/27/70, 5/6/70, 6/18/70, 6/22/70, 6/25/70 
7/2/70, 7/6/70, 7/13/70, 7/14/70, 7/22/70, 8/10/70, 8/11/70. 

96 



Id. 


8/17/70 


97 ". 


9/11/70. 


98 H- 


9/16/70. 


" M. 


9/29/70. 


100 Id. 





115 
contains entries reading: "GM-Boston," which may reflect discussions with MBM 

President Gerald McKee, Jr. about Boston. 

On October 11 and October 12, 1970 there are entries saying, "Call Bill Masiello" 

in? • • 

and "Calls: Bill M. re 10/13 Boston." As discussed earlier in this chapter, William 

Masiello has testified that in the Fall of 1970, Albert Manzi confronted Masiello at Sargent 

campaign headquarters in Worcester and complained that Masiello' s brother Frank had brought two 

"deadbeats" — MBM and DMJM -- into Massachusetts. Manzi said that MBM and DMJM were behind in 

commitments that they had made to acquire contracts, according to William Masiello 's 

testimony. 

On October 13, 1970, Mansueto went to Boston. He had an appointment with Manzi 
scheduled for 2 p.m. Mansueto' s pocket calendar for October 13, 1970 also reflects a 
telephone call to Endicott Peabody about political contributions. 

Although Mansueto refused to appear before the Commission, he did testify before the 
Post Audit Subcommittee in 1978. Mansueto said that Manzi was demanding a large "contribution" 

from MBM in 1970 for the Sargent-Dwight campaign and that Mansueto called Peabody to ask 

10 8 109 

his advice. Mansueto told Peabody that Manzi had said that MBM's "dues were due." 

Peabody ' s response, according to Mansueto, was that "the only place that people in politics 

could get any campaign funds from [was] from other people who worked for the Commonwealth..." 

Thus, Mansueto testified, Peabody recommended giving a "contribution" to the Sargent-Dwight 

campaign. Peabody added that a "contribution" should also be given to the Democrats and 

112 
that the amounts should not be "extravagant," according to Mansueto. 



101 Id. 10/9/70, 10/12/70. 

102 Id. 10/11/70, 10/12/70. 

103 Id. 10/13/70. 

104 Id. 

105 Id. 

See Sp. Comm. 6/27/80 at 4-5. 

107 

Mansueto testimony, P. A. 5/23/78 at 43-44 

108 Id. at 44. 

109 Id. 

110 Id. 

111 1^. 

112 Id. 



116 



Endicott Peabody has also testified about that telephone conversation. Peabody 
recalled that Mansueto said that the solicitation came from "the Republicans" and 
that Mansueto may have told him that $10,000 was being demanded. ^ - 

Peabody also testified that he asked Mansueto whether the pressure was coming 
from Manzi , and that Mansueto replied that the pressure was indeed coming from 
Manzi. Although Peabody was the one who first mentioned Manzi 's name in that 
conversation, Peabody testified that he did not know -- until he heard Mansueto' s 
answer in that conversation on October 13, 1970 — that Mansueto knew Manzi . H° 

Indeed, Peabody testified that he was unaware in 1969 when he was trying to help MBM 

• 117 
with the UMass/Boston contract, that anyone at MBM knew Manzi. 

Peabody, an attorney, testified that he did not warn Mansueto that personal 
contributions larger than $3,000 — and corporate contributions of any amount — were 
illegal, although Peabody knew they were illegal. 119 Nor, according to Peabody, 
did he find out what MBM finally decided to do about Manzi. 120 

The MBM officials involved have since testified — (1) that MBM decided to give the 
full $10,000 that Manzi sought; 121 (2) that MBM regarded this as a voluntary contri- 
bution, not an extortion; (3) that the $10,000 came from MBM corporate funds; 123 
(4) that the payment was not charged to MBM's existing "political contributions" account 124 
but instead was disguised as an advance to an MBM officer 125 which was then written 



113 Peabody testimony, P. A. 3/29/78 at 22-23, 89. 

114 id. at 92-93 . 

115 — 

Peabody testimony, Sp. Comm. 6/19/80 at 208. 

116 Id. at 155. 

117 id. 

118 Peabody testimony, P. A. 3/29/78 at 90-91, 97. 

119 

Id. at 90, 98; Sp. Comm. 6/19/80 at 160. 

1 20 

Peabody testimony, P. A. 3/29/78 at 23; Sp. Comm. 6/19/80 at 168. 

121 McKee testimony, Sp. Comm. 6/26/80 at 52-53; Mansueto testimony, P. A. 5/23/78 at 43. 
122 

McKee testimony, Sp. Comm. 6/26/80 at 17, 53. 

123 McKee testimony, 6 DiC 2/1/77 at 57. MBM-Boston check #1820, dated October 16, 1970 
for $10,000 payable to Anthony E. Mansueto, was allegedly used. 

124 Testimony of Commission financial investigator James J. O'Neill, Sp. Comm. 6/25/80 
at 19. 

' MBM Cash Disbursements Book entry for check #1820; O'Neill testimony, Sp. Comm. 
6/25/80 at 30. 



117 

126 
off through the "selling, general and administrative expense" account; and (5) that 

this $10,000 voluntary contribution to the campaign of Governor Francis Sargent and 

Lieutenant Governor Donald Dwight was delivered in cash within a brown paper package ° 

which was transported from downtown Boston to Worcester where it was handed quickly to 

Albert Manzi in the back of Manzi's grocery store. 129 As discussed in Chapter VII below, 

Peabody allegedly did learn in February 1971 of this October 1970 payment to Manzi, and 

MBM -- allegedly upon Peabody ' s suggestion -- then put the $10,000 check which had 

generated the cash into a safe deposit vault so that it was no longer located in MBM's office 

with MBM's other books and records. 

Even after MBM made the $10,000 cash payment to Manzi in October 1970, Manzi 

continued to press MBM for additional payments, according to Mansueto. When Mansueto 

pleaded MBM's poverty and satisfaction of its obligations, Manzi allegedly informed 

131 
Mansueto, "You don't just give once." 

The Alleged MBM Payment to Manzi in 
February 19 72 



In February 1972, MBM generated $21,500 in cash within the space of three days. 
Of that amount, $11,500 was produced from three checks made payable to MBM official 
Daniel J. Shields and cashed by MBM President McKee ' s father (who worked in the MBM 
office). -* 2 The other $10,000 resulted from a check payable to cash which was 

"17 3 

cashed by MBM comptroller Andrew Serell. 

MBM officials testified at the DiCarlo-MacKenzie trial in 1977 that $10,000 in cash 
was given to MacKenzie (to share with DiCarlo) on February 18, 1972. No mention was 
made at the DiCarlo-MacKenzie trial of the other $11,500 even though the FBI was aware 
of it and had been told in 1974 that it had gone to Boston for DiCarlo and MacKenzie. 



126 

Transcript of MBM Accountant's Workpaper for fiscal year ended 4/30/71. 

12 Heyman testimony, 25 M/M 3/26/79 at 57. 

128 

Id. at 59. 

129 Id. at 67-70. 

130 , „ 

Written statement dated June 12, 1980 executed by Jack S. Thomas in London, England, 

at 1-2. 

131 

Mansueto testimony, 2 M/M 2/13/79 at 72. 

132 Shields testimony, Sp. Comm. 6/2/80 at 67-70. 

133 

McKee testimony, 5 DiC 1/31/77 at 53-54. 

134 

Id. at 52-56. see discussion in Chapter \7TI, infra . 

135 

FBI Airtel dated February 7, 1975 from Special Agent in Charge (SAC) of the Philadelphia 

office to the SAC of the New York office, re: NY FBI file no. 166-3647. See discussion 
in Chapter VIII, infra. 



118 

In testimony before the Commission in 1980 MacKenzie admitted receiving cash 

from MBM in February 1972 but said the amount was only $8,000 of which $4,000 went 

136 
to DiCarlo. Testimony by MBM officials William F. Harding and Daniel J. Shields 

tended to corroborate MacKenzie. Shields also testified that he kept $2,500 of 

the cash that was generated in February 1972 since it was due to him, and that an- 

138 
other $1,000 went to a BBC official. These amounts ($8,000 + $2,500 + $1,000) 

total $11,500 -- the amount generated by checks to Shields. 

As for the other $10,000, the Commission heard testimony that it went to Albert 

Manzi. William Masiello testified that he was given the money in cash by MBM and 

139 
that he delivered it to Manzi at Manzi' s home in Paxton. Masiello said the 

transaction occurred in February 1972, the month that Masiello' s brother reacquired 

140 
Masiello & Associates from another firm. 

That the $10,000 cashed by Andrew Serell was for Manzi may be supported by 

entries in Anthony Mansueto's calendars. On January 31, 1972 Mansueto's calendar 

141 
says: " URGENT Andy S (10M - 10 days) then call Bill M. ..." And on February 2, 

1972 Mansueto's calendar says: "Bill Masiello - re Toots sore. OK - but won't do 

142 
anything if & until he gets 10M. " Mansueto admitted, in testimony at the 

Manzi-Masiello trial, that the January 31 and February 2, 1972 entries in his 

calendars reflected conversations about a Manzi demand for another $10,000 in cash 

14 3 
from MBM. Mansueto testified, however, that he succeeded in putting Manzi off 

for another three months. 



136 MacKenzie testimony, Sp. Comm. 5/28/80 at 42-45. 

137 

Shields testimony, Sp. Comm. 6/2/80 at 67-70; Harding testimony, Sp. Comm. 

6/4/80 at 47. 

138 Shields testimony, Sp. Comm. 6/2/80 at 69-70. 

139 William Masiello testimony, Sp. Comm. 6/24/80 at 49-50. 

140 Id. 

141 

Mansueto desk calendar, 1/31/72. 

14 2 

Mansueto pocket calendar, 2/2/72. 

143 Mansueto testimony, 2 M/M 2/13/79 at 95-98, 139. 



119 



The May 18, 1972 Parker House Meeting 

and MBM's May 23, 1972 Payment 

to William V. Masiello for Manz i 

144 

During May of 1972, MBM generated another $20,000 in cash. MBM witnesses 

testified that $10,000 of that money went to Ronald MacKenzie, to be shared with 

145 
Joseph DiCarlo. MacKenzie admitted to the Commission that he received this 

$10,000 and gave $5,000 of it to DiCarlo, and DiCarlo admitted receiving $5,000 

146 
in May 19 72 from MBM via MacKenzie. Thus, there is no dispute about this payment. 

As for the other $10,000 in cash that MBM generated in May of 1972, the MBM 

witnesses testified that the money was intended for Albert Manzi and was given to 

147 

William V. Masiello to deliver to Manzi. Masiello agreed, testifying that he 

received the $10,000 in cash from MBM in Boston and passed it in turn to Manzi in 
a parking lot in Marlborough. -^8 

As to why MBM was giving this additional $10,000 to Manzi, there is some 
disagreement. To set the context, it should be noted that on May 4, 1972, MBM 

reactivated a formal proposal to provide project management for Phase II of the 

14 9 
UMass/Boston project. Since the contract that MBM had obtained in December 1969 

covered only Phase I of the UMass/Boston project, 150 mbm was now applying for Phase 

II. MBM's Phase II proposal sought a fixed fee of approximately $2 million, as well 

as certain other payments on a "reimbursable" basis. 



144 

MBM check #3549 dated 5/12/72 for $10,000 payable to cash; MBM-Boston check #3130 
dated 5/23/72 for $5,000 payable to cash; EDI check #171 dated 5/23/72 for $5,000 
payable to cash. 

145 

McKee testimony, 5 Die 1/31/77 at 56-63; Thomas testimony, 11 DiC 2/8/77 at 68-83. 

146 

MacKenzie testimony, Sp. Comm. 5/28/80 at 48-50; DiCarlo testimony, Sp. Comm. 
6/3/80 at 116. 

147 

McKee testimony 12 M/M 3/1/79 at 72; 13 M/M 3/2/79 at 66-72; Sp. Comm. 6/26/80 

at 82-83; Thomas testimony, 10 M/M 2/26/79 at 77-81. 

148 

William Masiello testimony, Sp. Comm. 6/24/80 at 62-64. 

149 

Draft Consultant Contract for Project Management Services, Massachusetts State 

Project No. U67-4 Phase II, between the Bureau of Building Construction and MBM; 

certification dated May 4, 1972 by Seymour Berger authorizing Jack S. Thomas to 

tender proposals and execute contracts on behalf of MBM. See also Draft Memorandum 

of Approval #72-84 dated May 4, 1972 from Walter J. Poitrast to Alan Altshuler 

(Secretary of Transportation and Construction) and Robert L. Yasi (Secretary of 

Administration and Finance) concerning continued services of project management 

consultant for Phase II and extended services of MBM as project manager for Phase i. 

See also letter dated December 29, 1971 from Gerald McKee, Jr. to Walter J. Poitrast, 

150 ' 

See discussion in Chapter IV supra . 

Draft Consultant Contract for Phase II of UMass/Boston, at 12. 



120 



MBM had reason to believe that the BBC would support MBM's proposal, since BBC 
Director Poitrast's administrative assistant, Frederick Kussman, had helped MBM draft 
the proposal. MBM also had reason to believe that A&F would be favorably disposed 
toward the proposal, since Deputy A&F Commission Albert Zabriskie had already expressed 
his support to MBM for Phase II. -^ The only obvious problems for MBM concerning 
Phase II were that (1) there was a chance that outside project management would not be 
used for Phase II, and (2) there was a chance that the University's plans for Phase II 
would be scrapped altogether, with the UMass/Boston campus not going beyond the 
buildings constructed under Phase I. 154 MBM was aware of these problems and, accordingly, 

incorporated in its proposed contract a provision that MBM would be paid $1,050,000 

155 
even if Phase II did not go forward. In addition to trying to see to it that Phase 



II would proceed and that MBM would receive a Phase II contract, MBM also in May 1972 
was seeking an extension of its Phase I contract worth several hundred thousand dollars. 

On May 5, 1972, MBM Vice President Mansueto's pocket calendar contained a note 
reminding Mansueto to set up a meeting for May 11, 1972 in Boston for McKee , Mansueto, 
Manzi, and William Masiello. 157 Mansueto has testified that he called William Masiello 

on May 8, 1972 to set up the meeting. The meeting was scheduled, but it then had 

159 
to be postponed for a week, because Mansueto's wife took ill on May 11, 1972. 



152 

Notes of January 31, 1977 interview of Frederick J. Kussman [by DiCarlo Defense 
Team attorney William R. DiMento] , at 1. See also manuscript draft consultant 
Contract for Project Management Services, Mass. State Project No. U67-4 Phase II, 
part of which is in Frederick J. Kussman 's handwriting. 

153 See "confidential" memorandum dated January 28, 1972 from C. Ronald Rabin to 
Gerald McKee and Jack Thomas, concerning a telephone conversation with Albert 
H. Zabriskie on January 27, 1972. 

154 

Indeed, that is what eventually happened. 

155 

Draft Consultant Contract for Phase II of UMass/Boston, at 12. 

156 

Draft Consultant Contract for Project Management Services, Massachusetts State 
Project No. U67-4 Phase I between the BBC and MBM, effective date to be June 1, 
1972 for extension of services through November 1, 1973. See also draft 5/4/72 
Memorandum of Approval #72-84, at 1. 

157 

Mansueto pocket calendar, 5/5/72. 

158 

Mansueto testimony, 2 M/M 2/13/79 at 16 3. 

159 

Id. at 165-169; 7 M/M 2/20/79 at 107; Mansueto pocket calendar, 5/11/72, and 
hTs desk calendar, 5/11/72. 



156 



121 



On May 18, 1972 McKee and Mansueto flew to Boston. 160 They went to the Parker 

3 61 
House, where they met with William Masiello and with Albert Manzi . There is no 

dispute among McKee, Mansueto, and Masiello about many aspects of what transpired that 

day at the Parker House. They agree that a meeting took place involving McKee, Mansueto, 

Masiello, and Manzi. 16 They agree that Manzi complained that MBM was not meeting 

its "commitments" 163 and that MBM would be severely damaged in Massachusetts — even 

run off the UMass/Boston Phase I job prematurely -- unless MBM came up with thousands 

164 
of dollars in cash, fast. They agree that five days after this Parker House meeting, 

MBM gave $10,000 in cash to Masiello to deliver to Manzi. 16 

Masiello supplied some additional detail about the Parker House meeting of May 

18, 19 72. He said that Manzi, to make his point about MBM being behind in its "commitments" 

took out an adding machine tape which showed that MBM had already received $3.5 million 

on the UMass/Boston contract. Masiello said he thought that Manzi had gotten the tape 

16 7 
from the State Comptroller's office. That was supported by testimony from M. Jospph 

Stacey and Albina Giardiello -- respectively the State Comptroller in 1972 and one of 

his employees — who testified that an adding machine tape was prepared for Manzi in 

16 8 
1972 showing MBM's receipts under the UMass/Boston contract. Stacey added that 

Manzi never sought such information about any other firm or contract. MBM President 



Mansueto testimony, 2 M/M 2/13/79 at 173. 

161 

McKee testimony, Sp. Comm. 6/26/80 at 72; Mansueto testimony, 2 M/M 2/13/79 at 184. 

162 

McKee testimony, 12 M/M 3/1/79 at 60-62; Mansueto testimony, 2 M/M 2/13/79 at 181, 183; 
William Masiello testimony, Sp. Comm. 6/24/80 at 54. 

163 

McKee testimony, 12 M/M 3/1/79 at 6 3-64; Sp. Comm. 6/26/80 at 73-74; Mansueto testimony 
2 M/M 2/13/79 at 191-192; William Masiello testimony, Sp. Comm. 6/24/80 at 56-57. 

164 

McKee testimony, 12 M/M 3/1/79 at 64; Sp. Comm. 6/26/80 at 73-74; Mansueto testimony, 

2 M/M 2/13/79 at 192-194 . 

165 McKee testimony, 13 M/M 3/2/79 at 66-72; Sp. Comm. 6/26/80 at 82-83; William Masiello 

testimony, Sp. Comm. 6/24/80 at 62-63; 

Thomas testimony, 9 M/M 2/23/79 at 76-94. 
166 

William Masiello testimony, Sp. Comm. 6/24/80 at 55. 

167 

Id. at 47, 55. 

168 

Testimony of M. Joseph Stacey, Sp. Comm. 6/25/80 at 12-14; testimony of Albina 
Giardiello, Sp. Comm. 6/25/80 at 14-17. 

16 9 

Stacey testimony, Sp. Comm. 6/25/80 at 15. 



122 



McKee, in testimony before the Commission, agreed that Manzi may have shown such an 
adding machine tape at the Parker House Meeting. 

Masiello added that Manzi also took out a second sheet of paper which listed the 
payments that MBM had made to Manzi up to that point. '^ Masiello said that Manzi 
compared the MBM fee receipts with the MBM "contributions" and pointed out that MBM was 
far short of its commitment. McKee denied this in testimony before the Commission. 

Masiello also testified that there was no question but that Manzi was seeking the 
money for the Sargent campaign-^- '^ anc j that Manzi wanted the money soon because he was 
holding a fundraising party in Worcester for Sargent on May 21, 1972. 175 Manzi apparently 

falsely reported illegal corporate money as ticket sales from private individuals on 

176 
other occasions. 

McKee, Mansueto, and Masiello all agree that the Parker House meeting with Manzi 
was brief. According to Masiello, Manzi left first, and McKee and Mansueto then dis- 
cussed a related matter with Masiello. ^ 7 Masiello has testified that McKee said that 
he was confident that MEM would receive the UMass/Boston Phase II contract if there were 
to be such a contract, but that he was concerned that Phase II, or project management in 



i 7n 

McKee testimony, Sp. Comm. 6/24/80 at 74. 

William Masiello testimony, Sp. Comm. 6/24/80 at 55-56. 

172 Ii- 

173 

McKee testimony, Sp. Comm. 6/26/80 at 74. 

174 

William Masiello testimony, Sp. Comm. 6/24/80 at 56, 61. 

175 Id. at 56. 

176 

See Stacey testimony, Sp. Comm. 5/5/80 at 6-17; DMJM investigation portion of 

this report. 

William Masiello testimony, Sp. Comm. 6/24/80 at 57-60. 



123 



1 78 
Phase II, might never come to pass. Therefore, according to Masiello, McKee asked 

Masiello to speak to Masiello' s friend, State Senate Ways & Means Committee Chairman 

James A. Kelly, Jr., about mandating by law that outside project management be used 

for Phase II of UMass/Boston. 179 Masiello further testified that he replied to McKee 

that he (Masiello) was not willing to help MBM out, even though McKee offered to give 

1 on 

Masiello a six-figure amount (i.e., $100,000 or more) for his efforts. xou 

In the foregoing discussion, no mention has been made of Albert Manzi's testimony. 

Manzi testified in 1979 in Massachusetts Superior Court while on trial as a defendent 

181 
to a criminal indictment in this matter. He was acquitted. When asked to testify 

to the same matters before the Commission in 1980, Manzi refused, citing his privilege 

18 2 
against self-incrimination. Since Manzi was apparently protected by the Constitution's 

double jeopardy clause from a new state prosecution for the same alleged offense and 

since the federal statute of limitations had presumably run, it is unclear what Manzi's 

basis was for asserting the privilege against self-incrimination. The Commission 

observes that some witnesses assert the privilege against self-incrimination when they 

are concerned that truthful answers would be admissions of prior perjury. Accordingly, 

it seems unproductive to review Manzi's prior testimony at length. In brief, Manzi 

testified that he did meet McKee and Mansueto at the Parker House in May 1972, but 

18 3 
that no one else — including Masiello -- was present. Further, Manzi said that 

there was no discussion of political contributions or other payments by MBM, because 

Manzi did not believe in bringing up the subject to people such as McKee and Mansueto 

184 
whom Manzi did not believe would be giving "with an open heart." Finally, Manzi 

185 
denied receiving $10,000 cash at any time from MBM. As discussed in Chapter IX, 

some of Manzi's trial testimony tracked testimony by Masiello at the same trial -- 

18 6 
testimony that Masiello has now admitted was perjurious. 



178 Masiello testimony, 23 M/M 3/22/79 at 82-84. 

179 Id. at 84; Sp. Comm. 6/24/80 at 58-59. 

18 

William Masiello testimony, Sp. Comm. 6/24/80 at 59-60; 23 M/M 3/22/79 at 84-85. 

181 

Commonwealth v. Masiello, Manzi , Cr. Nos . 019122-7, 018334 (Suffolk Cty. 1979) 

Manzi testimony 18 M/M 3/14/79, 19 M/M 3/15/79. 

18 2 

Manzi testimony, Sp. Comm. 6/9/80 at 6, 8. 

18 3 

Testimony of Albert P. Manzi, 18 M/M 3/14/79 at 52-57. 

184 

Manzi testimony, 19 M/M 3/15/79 at 32. 

18 5 

Manzi testimony, 18 M/M 3/14/79 at 77-78. 

18 6 

William Masiello testimony, Sp. Comm. 5/12/80 at 67-69; Sp. Comm. 6/24/80 at 52-5! 



124 



McKee and Mansueto attempted at the Manzi-Masiello trial to portray the May 18, 1972 
meeting as an extortion. Judge Joseph R. Nolan, who heard the case without a jury, found 
Manzi and Masiello not guilty of an extortion (or of campaign law violations) . For a 
further discussion of the trial, see Chapter IX, below. 

Before concluding this section, it should be noted that MBM generated additional cash 

during months in which Anthony Mansueto has testified that Manzi was making dunning phone 

187 
calls to him. The cash generated includes $5,000 in October 1971, another $5,000 in 

November 1971, and still another $5,000 in January 1972 which MBM officials have testified 

went to Ronald MacKenzie (to share with Joseph DiCarlo) , but which MacKenzie denies having 

received. For a discussion of those payments, see Chapter VII, below. 

Conclusion 

There is substantial evidence consistent with the allegation that MBM obtained the 
UMass/Boston contract as a result of a prior corrupt agreement to make illegal cash paymenl 
through Albert Manzi in return for the contract. Additional evidence of attempts by MBM 
to use political clout and/or corrupt means to obtain contracts and to attain other ends 
is set forth in Appendices B, C, D, E, and F. 

Of the people most likely to have direct knowledge of such a corrupt agreement, Albe] 
Manzi refused to testify before the Commission, asserting his privilege against self- 
incrimination. Donald Dwight (who awarded the contract) refused to appear and testify 
fully before the Commission. At a preliminary private hearing, Dwight — an out-of-state 
witness -- asked the Commission to forbear from placing him under summons. The Commission 
credited Dwight 's promise that he would return for full, public testimony and honored 
Dwight 's request that he be extended the courtesy, as a former Lieutenant Governor, of beiiF 
permitted to appear and testify without having been summoned. Anthony Mansueto also 
refused to appear and testify. 

Without testimony from at least one of these individuals that MBM obtained the 
UMass/Boston contract in return for a prior commitment to make illegal cash payments 
through Manzi, the Commission does not feel it appropriate to make a formal finding of 
fact that MBM bought the UMass/Boston contract. 



Mansueto testimony 2 M/M 2/13/79 at 71-78, 119 



125 



There is, however, abundant evidence from MBM witnesses and documents, as well as from 
other sources discussed above, that MBM attempted to win contracts in Massachusetts by 
political means and that MBM engaged in a pattern of making voluntary illegal cash 
payments to politicians and fundraisers who MBM believed could influence contract awards 
and legislation in MBM's favor. 



- 126 - 

CHAPTER VI 

THE TERMS OF MBM'S UMASS/BOSTON CONTRACT, 

MBM'S ANTICIPATED PROFIT, 

AND MBM'S PERFORMANCE ON THE CONTRACT 

Terms of the Contract 

Although MBM was awarded the UMass/Boston construction management jod on 
December 22, 1969, the terms of the contract were yet to be determined. The BBC 
had never entered into such a contract before and therefore left it to MBM to 
make a proposal as the basis for the negotiations. 

On January 8, 1970, MBM Boston Regional Manager Jack Thomas wrote a memo 
advising the other MBM officials that a delay in maKing a proposal would produce 
a concomitant delay in the signing of the contract which in turn would cause a 
delay in MBM's reimbursement for such out-of-pocket expenses as the rental of 
office space and the purchase of office equipment. 2 MBM was experiencing 
substantial cash flow problems at the time,^ so MBM submitted its first 
proposal on February 4, 1970.^ 

MBM's first proposal called for MBM to receive two types of fees: (1) a 
"fixed" fee of $1,455,000 covering certain personnel and services that MBM would 
provide: and (2) a "reimbursable" fee to compensate MBM on a cost-plus-specified- 
percentaae-markup basis for other personnel and services. There was no limit on 
the amount MBM could receive under the reimbursable section. The MBM proposal 
also stated that if the UMass/Boston Phase I project was not completed Dy 
SeotemDer 30, 1972, MBM's fee would be subject to adjustment ( i.e. , enlargement) 

An MBM internal memorandum^ summarizes discussions that MBM then had with 
Frederick Kussman (who was administrative assistant to BBC Director Waiter 
Poitrast'. According to the memorandum -- 



1 P. A. Report at 34. 

2 Memorandum dated January 8, 1970 from J[acK] S. T[homas] to G[erald] McKee, 
Jr., A[nthony] E. M[ansueto], M[itchell] Gordon, C. R[onald] Raoin, ana M L artinj 
H. Heyman, "Subject: 459-004, University of Massachusetts, Boston." 

3 Testimony of Gerald McKee, Jr., Sp. Comm. 6/26/80 at 85; see letter dated 
February 26, 1970 from Jeremiah D. Lambert to Gerald McKee, Jr., concerning fees 
owed to the Peabodv firm by MBM. 

4 Proposal submitted bv MBM to the BBC on Feoruary 4, 1970 in regard to the 
UMass/Boston project. 

5 Undated, unsigned memorandum entitled "Important Points from Meeting witn 
Kussman," found in MBM's files. 



- 127 - 

"[Kussman] said because of internal problems, we cannot have 
design review in reimbursables . We therefore agreed to put 
the 5-man design review group in the [fixed] fee.... We 
[also] agreed to change the scope paragraph to say [that the 
UMass/Boston Phase I project would be] 'substantially 
completed by the end of 1972.' [Kussman] said this gives him 
the protection he wants." 

Based upon such conversations with the BBC, 6 MBM submitted a revised 

Drooosal which shifted design review services to the fixed fee portion of the 

contract, extended MBM ' s services through December 31, 1972, and correspondingly 

increased MBM • s fixed fee to $1,725,000.7 unlike the original proposal, the 

second proposal did not state the fixed fee in dollar terms. Instead, it said 

that MBM would receive a fixed fee equal to 1.15 percent of the total 

UMass/Boston Phase I project cost and that the total project cost would be 

estimated for this Durpose as being $150 million. (Multiplication reveals that 

1.15 percent of $150 million equals $1,725,000 -- MBM's proposed fixed fee.) As 

to whv the amount of the fixed fee was stated in this fashion, the MBM internal 

memorandum says that 

"[Kussman] commented that the public liked percentages more 
than lump sums . " 

The BBC did not accept this second proposed contract from MBM. 8 a major 
reason why the second proposal was rejected (according to a contemporaneous 
memorandum from Endicott Peabody, summarizing a conversation that Peaoody had 
with Jack Thomas') was that the second proposal still included in the 
reimbursables section certain salaries for MBM employees that were embarrassingly 
high in the BBC's view. 9 By shifting those salaries into the lump sum fixed 
fee section -- where the salaries would not become a matter of puDlic record -- 
the embarrassment could be avoided. Accordingly, MBM's third proposal made tnat 
change, increasing MBM's proposed fixed fee to 1.6 percent of estimated 
construction cost -- an amount equal to $2. A million. 10 

The MBM third proposal was submitted on March 19, 1970. Altnough quick 



6 Poitrast testimony, cited in P. A. Report at 37-38. 

7 Proposal submitted by MBM to the BBC sometime between February h and Marcn 
19. 1970 in reaard to the UMass/Boston project. See memorandum dated March 3, 
1970 from Jack S. Thomas to Gerald McKee , Jr. concerning changes in tne proposed 
MBM UMass/Boston contract. 

8 Memorandum dated April 15, 1970 from Gov. [Endicott] Peaoody to Mr. 
[Jeremiah D.] Lambert, re: "MBM." 

9 16. 

10 ProDosal submitted by MBM to the BBC on March 19, 1970 in regard to the 
UMass/Boston project. 



- 128 - 

approval was expected,! 1 the proposal had not been accepted by April 15, 1970, 

when Endicott Peabody wrote the following memorandum : 1 2 

"I was in Boston on Tuesday, April 14. I called [Deputy 
A&F] Commissioner Zabriskie to find out whether the MBM 
contract had been signed. I was surprised to hear nim say 
that the contract called for an awful lot of money. He felt 
the contract would be all right if MBM lowered its fee. I 
asked him if I could see the contract. He said that Walter 
Poitrast, Director of the Bureau of Building Construction had 
it. I then called Jack Thomas at MBM in Boston. He was 
surprised that the contract had been bucked back to Poitrast. 
He understood it was on the Commissioner's desk for 
signature. I chastised him for not keeping us informed as to 
the progress of the contract, and asked him if he wanted our 
help at the present time. He said yes. I called Poitrast who 
was somewhat embarrassed. He said the fee was a little nigh 
-- at 1.6% of the total cost. He thought it would get through 
more quickly if it was shaved to 1.5%. 

"Briefly, the contract is in two parts: (a) reimpursa- 
bles, and (b) fee. In other words a cost plus fixed 
Dercentage. The construction cost for the University of 
Massachusetts building will be $150 million. On this basis a 
1.6% will total $2. A million. If MBM shaves it .1% they will 
have to reduce their fee $150,000 which is a lot of money. 

"Subsequently, I learned from Thomas that the initial 
proposal was for a fee at 1.16%. However, certain persons 
were listed on the reimbursables side of the contract which 
made it embarrassing to Poitrast to have their salaries 
publiclv known. They were then transferred to the fee side 
and the fee increased from 1.16% to 1.6%. However, in 
addition to the actual cost of the salaries there was a 40% 
add on which would not have been the case had it been cnarged 
to reimbursables. As a result, MBM actually stood to gain an 
additional $75,000 by transferring these men from the cost 
reimbursables to the fee side. So MBM could shave their fee 
to 1.55% and be no worse off." 

Peabodv then attempted to work out a compromise on the fixed fee, and 

agreement was reached on April 17, 1970 that the fixed fee would be 1.53 percent 

(equallinq $2 , 295 , 000) . 1 3 Peabody wrote a memorandum 1 ^ explaining how this 



came about : 



"[T]he Commonwealth took the position that MBM snould charge 
no more than 1.5%. After conversing with Zabriskie and 
Poitrast, I proposed 1.53%. This saved [MBMj at least 
$45,000. The net result was that the MBM fee was no more than 
$10,000 o p f their initial proposal. This was because on 
Schedule B they had a 20% add on, whereas on Schedule A tney 
had a 40% add on. Certain fees were taken from Schedule B 
and added to Schedule A with a consequent increase in fee of 
20%. Since this was only a bookkeeping change, and there was 
no increase in costs, there was no loss in making this 
addition to Sch. A only 20% as opposed to 40%. McKee himself 
agreed that MBM was 'netting out at 1.53% at the same figure 
that they had originally proposed.'" 



11 Memorandum dated April 2, 1970, from Gov. [Endicott] PeaOody to Mr. 
[Jeremiah D. ] Lambert, concerning MBM contract negotiations. 

12 Memorandum dated April 15. 1970 from Gov. [Endicott] Peabody to Mr. 
[Jeremiah D. ] Lambert, re: "MBM". 

Memorandum dated April 17, 1970, from JacK S. Thomas to Walter [J.] 
Poitrast . 

14 Peabody 4/15/70 memorandum to Lambert. 



- 129 - 

The documents discussed above, about MBM's proposals, were not available to 
the Post Audit Subcommittee, whose final report expressed puzzlement at wny the 
BBC would have rejected MBM's initial proposals -- which emDodied lower fixed 
fees -- and accepted the final proposal at the higher fixed fee. 15 As just 
discussed, the answer, briefly, is that MBM's total fee did not change much from 
one proposal to the next, and the fixed fee increased mainly because certain 
items were being removed from the reimbursable portion of the contract and placed 
in the fixed fee section for the reasons mentioned above. 16 

The agreement of 1.53 percent between Peabody, Zabriskie, and Poitrast still 

had to be ratified by A&F Commissioner Donald Dwight. Dwight apparently had 

expressed concern about the size of the fee to Poitrast and directed Poitrast to 

speak with Leo Demarsh of the Department of Public Wcrksl" 7 (of wnicn Dwignt nad 

been a commissioner until 1969). Poitrast had sent a memorandum to Dwignt on 

April 14, 197018 (when MBM was still seeking a 1.6 percent fixed fee) reporting 

that 

"Leo told me that the only services that PuDlic Works is 

using is in the review area, that they have not as yet any in 

the supervision area. The cost for the review services on a 
per diem basis is running about 20% of the design fee. 

"If we relate this percentage to our design fees, we 
would be paying better than 1.2% for just review. MBM is then 
onlv charging .4% above this for full administrative services 
plus supervision after construction has started. It appears, 
based on Public Works costs, that this contract is well witnin 
a reasonable percentage for the service." 

Poitrast did not mention in the memorandum that MBM's 1.6 percent (later reauced 
to 1.53 percent) fee was only part of the total fee that MBM was seeking. MBM 
was, of course, seeking a cost-plus-percentage-markup reimbursaoles fee, which 
was included in all of MBM's proposals, included in the final contract, and which 
generated more than $1,000,000 in revenues to MBM above and beyond the fixed 
fpp 19 



15 P. A. Report at 34-47 



16 Hartley J. Chazen, an attorney who had been with the Monascn & Chazen law 
firm in 1970 when that firm helped MBM draft its proposals, told Commission staff 
in an interview, and wrote a letter to the Commission repeating, that he recalled 
MBM having substantially reduced its fee requests as a result of hard bargaining 
by the BBC. See letter dated August 28, 1979 from Hartley J. Cnazen to 
Commission staff. The documents discussed aDove do not corroborate Mr. Chazen's 
memory. Several of those documents were not availaole to the Commission at the 
time, being suoolied later by the Peabody law firm. 

17 Memorandum dated April 14, 1970 from w[alter] J. Poitrast to D[onald] R. 
Dwight, re: "Mass. State Project U67-4 -- University of Massachusetts -- Columbia 
Point Management Fees." 

18 id. 

19 Comptroller's cards. 



- 130 - 

Nor did Poitrast mention the reimbursables fee in an April 21, 1970 
memorandum recommending to Dwight that MBM's final proposal be accepted. 20 
Moreover, Poitrast's memoranda failed to make plain that MBM's 1.53 percent fixed 
fee would not be reduced even if the actual project cost turned out to be less 
than the estimated project cost of $150 million. For that matter, Poitrast's 
memoranda did not point out that the $150 million project cost, upon which MBM's 
1.53 percent fee was to be calculated, included costs of acpuiring the site and 
other expenses as to which MBM had no supervisory or other role to play. 21 it 
should be noted in this regard that in 1978 the Governor's counsel, Max Volterra, 
recommended that because the UMass/Boston Phase I project had been scaled down to 
substantially less than $150 million, MBM should either be called upon to 
renegotiate its fee or be subjected to suit by the Commonwealth. The Commission 
is not aware that either alternative was pursued, but such action would have been 
largelv meaningless since MBM's financial position apparently would have made it 
impossible for the Commonwealth to demand or recover any monies from MBM. 22 

Dwight approved MBM's contract on April 22, 1970. 23 

MBM's Ant icipated Profit 

In the course o f its investigation, the Commission found an internal MBM 
document, written around April of 1970, analyzing MBM's projected profit from tne 
fixed fee portion of the UMass/Boston contract. 24 It would seem to have been 
unnecessary for MBM to analyze whether MBM would make a profit on the 
reimbursables portion of the contract, since the reimbursables section called for 
M9M to recoup its costs and to receive a percentage marK-up on top of those 
costs. Thus, it is not surprising that the MBM profit analysis concerned itself 
onlv with MBM's $2,295,000 fixed fee. 

As to the $2,295,000 fixed fee, the analysis showed all the costs tnat MBM 
expected to incur in relation to the fixed fee. After subtracting tnose costs, 
the analysis arrived at a "Gross Profit" figure of $1,280,948 -- which is 
approximately a 56 percent profit. The "Gross Profit" would have oeen even 



20 Memorandum of Approval #70-80 dated April 21, 1970 from Walter J. Poitrast 
to Donald R. Dwight, regarding the "Rate of Compensation" for "Mass. State 
Proiect U67-4 #2A - University of Mass. ColumDia Point - Boston." 

21 See P. A. Report at 43-45. 

22 See discussion of MBM's financial situation in Chapter II supra . 

23 Approval of Donald R. Dwight dated April 22, 1970 of Memorandum of Approval 
#70-80. 

24 Document headed, "UMass Boston Campus 459-004, Summary of Budget," found in 
MBM files. Undated but probably prepared after the contract was signed on April 
22, 1970. 



- 131 - 
higher if MBM had not treated as expenses such items as "Public Relations" 
($90,000), "Legal Fees" ($40,000), and "Financing" ($25,000). MBM also treated 
as an expense the "Value of On-Line Systems & Procedures" which would be used on 
the project, Dresumably at no additional cost to MBM ($190,370). 

In testimony at the Manzi-Masiello trial in 1979, MBM President Gerald McKee, 
Jr. said that MBM's profit on the UMass/Boston contract was only 
$200,000-$250, 000. 25 i n 1980, when McKee appeared before the Commission, he 
was shown the document just discussed, and McKee said that the "Gross Profit" 
figure really was only a probable cash flow to MBM from the project, not 
reflecting associated overhead costs that should properly have been deducted to 
aet MBM's net profit on the project. 26 it should be noted, however, that the 
document included $94,675 as costs of services that other MBM offices would 
provide to the UMass/Boston project. It is true, though, that the document made 
no allowance for sales expenses. Such expenses, and perhaps certain other ones, 
could reasonably be used to reduce "Gross Profit" to "Net Profit." Nonetheless, 
for a service company, those expenses might be expected to be somewhat limited. 
Moreover, MBM's projected fixed-fee gross profit of $1,280,948 did not include 
whatever profit MBM may have made on the reimbursable portion of the April 22, 
1970 contract, and did not include whatever profit MBM may have made on tne 
$803,142 extension contract of December 27, 1972, the $57,636 extension contract 
of 1973, and the $47,862 "delay claim" contract of 1972. 

MBM's Performance 

MBM officials have maintained that MBM brought the UMass/Boston project to 
completion on time, within budget, and without major defects. 27 while the 
project clearly was more successful in these respects than many other projects 
studied by the Commission , 28 MBM's performance was criticized by UMass 
officials during the course of the project, as discussed Delow. A balanced 
assessment would seem to be that MBM did provide valuable services on the 
project, but that MBM's performance was not flawless and could have been provided 
at a lower fee . 



25 McKee testimony, M/M 3/1/79 at 28-29. 

26 McKee testimony, Sp. Comm. 6/26/80 at 38-40. 

27 McKee testimony, Sp. Comm. 6/26/80 at 3-6. 

28 See , e.g. , statistics and discussion elsewhere in this Final Report 



- 132 - 

The major reason why an outside firm such as MBM was used on the UMass/Boston 

Droiect was that the BBC simply lacked the staffing to expedite tne project. 29 

Since the state could have hired employees directly rather than using MBM, MBM ' s 

laroer fee would not seem to be justified unless MBM provided some sort of 

expertise unavailable to the BBC. While MBM officials maintain that they did so, 

UMass was less impressed at the time. For example, in a January 15, 1971 

memorandum , 30 UMass Planning Director Francis E. O'Brien, Jr. wrote to James J. 

Cusack, the BBC's UMass/Boston project engineer: 

"That the format of [MBM's] schedule is a computer output has 
no value whatsoever. We are looking for results -- how much 
time is the firm saving -- and I, as one, see none. On this 
basis, how do we justify the three to four million dollars the 
management service is costing the Commonwealth?" 

O'Brien and his assistant Willard Prince did make a "strong recommendation 

that project management be continued" from Phase I to Phase II of tne 

UMass/Boston project, according to the minutes of the Designer Selection Board 

meet ; nq of February 17, 1972. 31 But this recommendation was apparently maae 

more because O'Brien wanted to insure that the Phase II management would not be 

left to the short-staffed BBC than because he was impressed with MBM. For 

example, on April 3, 1972 O'Brien wrote a memorandum to Deputy A&F Commissioner 

Zabriskie32 that included the following: 

"The Commonwealth is now considering the desirability of using 
project management for Phase II.... 

"I would say that project management as project management v ia 
03 [the employment of a consultant] is not necessary on Phase 
II, since it has proved of little value in Phase I in building 
program, budget or schedule: but the state does need more 
skilled people on the job tnan it is accustomed to put on a 
job, and these people might well be hired under 03.... 

"If Phase I at Columbia Point were a one-shot, short term 
operation, consultants [such as MBM] make sense. As a long 
term operation, stretching over ten years, it does not. 
Consultants charge two to two and a half times what the state 
would pav people on 01 [permanent employees] or 02 [temporary 
employees ] . . . . 

"We do know that the consultant's schedule did not work. 
February o f 1971, the management consultant, witnout 
discussion with the University, in advertisements for 
construction of the buildings, promulgated a new schedule 
which added, not the four months attrioutable to tne metnane 
study, but nearly a year. Updated schedules indicate that 
even that schedule will not be met.... 



29 See discussion in Chapter IV supra . 

30 Memorandum dated January 15, 1971 from "Frank" [Francis E.] O'Brien [Jr.] 
to James [J.] Cusack, re: "Columbia Point /Schedule of Completion Dates," at 2. 

31 Minutes of the 88tn Reaular Meeting of the Designer Selection Board, 
February 17, 1972, at 1. 

32 Memorandum dated April 3, 1972 from F[rancis E.] O'Brien to A[loert H. ] 
Zabriskie, re: "Phase Ila design and construction staffing and organization." 



- 133 - 

"The construction, if it takes as long as now projected, will 
fall right on the average for non-resident ial /non-commerc ial 
structures of the same size order.... Tne state is paying the 
management consultants for high order skills and getting 
average performance.... 

"Nevertheless, the management consultants did do things that 
are worth something to the state. Just the added personnel 
made review of the enormous volume of documents 
manageable .... The bid documents -- as shown by the low spread 
of bids when multiple bids were received -- were of nigh 
quality .... In these matters and many others the staff hired 
through 03 was worth what the state paid.... 

"To summarize, and at the same time to clear up the earlier 
contradiction, I would suggest that the state hire people, not 
management consultants. Hire skilled man-hours, not computers 
and overhead. Hire the people, put them in the charge of 
someone in the state -- the BBC or the University -- and get 
the job done at, let's say, one-third of what the Phase I 
management consultants have charged.... 

"The Commonwealth could get damned good value, for far less 
money, by hiring what it really needs -- skilled people -- and 
not hiring 'project management,' something it does not need, 
or at least has not needed on Phase I at Columbia Point." 

Others at the university also found fault with aspects of MBM's performance. 

William Meehan and Willard Prince, two university staff memDers who worked at the 

project office during Phase I, composed a memorandum^ in which they noted the 

following : 

"BBC and MBM were responsible for approval of the scope of 
work to be performed or modified, and for the resulting 
charges or credits.... In numerous cases, tne University's 
staff raised objections to materials, methods, and costs 
involved in change orders, and in the acceptance of various 
designs and equipment to be installed in the project. In most 
cases the University's recommendations were followed, but in 
some cases they were disregarded: some serious deficiencies in 
the final design may be attributed to this disregard." 

Some design-related problems with which the University was especially concerned 

were the ventilation, heating, and cooling problems in the College I building and 

the failure of the saltwater cooling system. 34 

Moreover, it cannot be said without qualification that the UMass/Boston Pnase 

I project was built on time or within budget. The project was supposed to De 

substantially completed with opening set for late 1972,35 put the campus was 

not fullv readv for occupancy until January 1974.36 Part of the delay may have 

resulted from methane studies ordered by the Legislature , 37 but O'Brien did not 



33 Quoted in 2/24/78 UMass memorandum at 3-4. 

34 id_. at 4. 

35 MBM-BBC Contract no. 601, at 17. 

36 2/24/78 UMass memorandum, at 4. 

37 Acts of 1970, c.633. See also discussion of MBM's delay claim in Appendi: 



- 134 - 
believe that the full delay could be attributed to the methane studies. 38 
Moreover, UMass officials seem to feel that the time savings on the project were 
due more to O'Brien's work than to MBM's.39 As to the budget, the Legislature 
was unwilling to appropriate the full $150 million sought by the University . ^0 
After appropriating $130 million, the Legislature had to De asked to aad another 
$5 million due to overruns. 41 Moreover, the original budget haa contemplated a 
new MBTA subway stop but that stop was never built. 

When interviewed by Commission staff in 1979 and 1980, UMass/Boston officials 
generally expressed satisfaction with the way the project was built and tne way 
MBM performed as part of tne process. 42 The question remains whether O'Brien 
was correct in believing in 1971 and 1972 that MBM ' s participation provided 
needed staffing but that the same results could have been obtained at far lower 
cost to the Commonwealth. 



38 O'Brien A/3/72 memorandum to Zabriskie, supra n.32. 

39 Interview o r William R. Hamilton, Jr. by Commission staff. 

40 Section 9 of Chapter 898 of the Acts of 1969; Chapter 633 of the Acts of 
1970. 

41 State Auditor's Report No. 78-7-S-25, at 16-17. 

42 willard Prince 5/8/79 interview by Commission staff at 3; Francis E. 
O'Brien, Jr. 5/15/79 interview by Commission staff at 5; William ("Roy") 
Hamilton. Jr. interview by Commission staff. 



135 

CHAPTER VII 

CHALLENGES TO MEM'S UMASS/BOSTON CONTRACT 

The UMass/Boston project management contract which MBM had sought with such 
fervor became a source of contention and concern almost as soon as it was awarded 
to MBM. Indeed, a bill was filed in the Legislature less than six weeks after 
MBM won the contract -- and before the contract terms had even been negotiated -- 
to prevent MBM from handling the UMass/Boston project management. Although that 
bill did not pass, MBM faced an even more severe challenge less than a year 
later, when a series of scathing newspaper articles led to the formation of a 
legislative committee to investigate MBM's UMass/Boston contract. MBM felt so 
threatened that the firm paid tens of thousands of dollars in cash to avoid an 
unfavorable final report from the legislative committee. Less than a year after 
those payments concluded, another investigation by a legislative auditor caused 
concern to MBM. Finally, MBM received much unfavorable publicity from the 
DiCarlo-MacKenzie trial and the Post Audit Subcommittee hearings in 1977 and 
1978. As a result, the very contract which had catapulted MBM into a leading 
position in the burgeoning project management field contributed to MBM's ultimate 
demise . 

The present chapter considers the pre-1974 challenges to MEM's UMass/Boston 
contract. The DiCarlo-MacKenzie trial and its aftermath are discussed in Chapter 
VIII, and the Manzi-Masiello trial and its aftermath are reviewed in Chapter IX. 
The Post Audit Subcommittee filed a report about its own activities in 1978, and 
MBM's ultimate collapse is sketched briefly in Chapter II of the present report. 

The Bill Filed by 
Representative Thomas F. Fallon 
in 1970 

The UMass/Boston project management contract was viewed by some BBC employees 

as a challenge, if not an affront, to the BBC. The contract had the effect of 

removing the largest public building project in the history of the Commonwealth 

from the BBC's full control and placing it, instead, in the hands of a relatively 

inexperienced firm from New York. At least part of the decision to hire an 

outside firm such as MBM appeared to have been the responsibility of the new BBC 



1 See discussion in Chapter IV supra 



136 
Director, Walter J. Poitrast, and antagonism over Poitrast's selection as EEC 
Director may have played a part in some EEC employees' opposition to the decision 
to use an outside firm at UMass/Boston. 

James J. Cusack, Poitrast's unsuccessful rival for the BBC Directorship, 
lost no time in trying to restore the UMass/Boston project to full EBC 
management. He drafted a bill to delete the statutory provisions which had 
permittee the EBC to hire an outside project management firm for UMass/Eoston . 
The Cusack bill, moreover, would have required that only BBC personnel be used in 
the UMass/Boston project management team. Further, presumably tc forestall 
Poitrast from engaging MBM officers as "temporary BBC personnel," the Cusack bill 
would have required that all engineering personnel associated with the 
UMass/Boston project be registered architects and/or registered engineers. As 
Cusack was aware, neither McKee, nor Berger, nor Mansueto, nor MB^ Regional 
Manager Jack Thomas, nor MBM Project Manager C. Ronald Rabin was a registered 
architect or engineer. 

Cusack asked State Rep. Thomas F. Fallon (D-Clinton) to file the bill that 

c 

Cusack had drafted. Fallon, who knew Cusack and considered the bill to be 



2 Id. 

3 The Commission has copies of many letters recommending Cusack for the EEC 
Directorship in 1969. 

* "An Act Relative to Personnel for the Design Review and Supervision of 
Construction of a Campus for the University of Massachusetts in Boston," 
typescript draft [the Fallon bill], filed by Rep. Thomas F. Fallon, February 2, 
1970. Journal of the House, February 2, 1970, at 127. 

5 See Chapter IV, supra , for a discussion of those provisions. 

6 Id. 

7 Id. 

8 Notes of 5/1/79 interview James J. Cusack by Special Commission staff, at 6. 

5 Notes of 3/28/80 interview of Representative Thomas F. Fallon by Special 
Commission staff, at 1. 



137 



,10 



reasonable, filed the bill on February 2, 1970- 1 -- less than six weeks after 
MBM had won the UMass/Boston contract, and before the terms of the contract had 



even been neaotiated. 



11 



The Fallon bill was "late-filed" -- that is, it was filed after the normal 

1 2 

deadline for consideration during the 1570 legislative session. In order to 

be admitted for consideration on the merits, a petition for admission of the 
late-filed bill had to be approved by the House Rules Committee. Most 
late-filed bills do not clear that hurdle. Nonetheless, when MBM learned of the 



Fallon bill, it decided to take no chances. Endicott Peabody spoke to House 
Speaker David M. Bartley about the petition regarding the Fallon bill. 

Peabody then wrote a note dated February 19, 1970 to his partner Lambert, in 
which Peabody said: "I have temporarily forestalled a threat to knock out MBM by 



leoislation . 



..15 



Peabody expanded upon this news in a letter to McKee 



16 



"I spoke to Speaker Bartley and he is going to bury the 
legislation in the Joint Rules Committee, and will not 
report it out. When I next go to Boston, around March 1, I 
will talk to him about it." 

McKee responded by a letter which said: 



10 Journal of the House, February 2, 1570, at 127. 

11 See discussion of the contract negotiations in Chapter VI, 
supra . The contract was formally awarded to MBM on December 22, 
1565 and signed on April 22, 1570. 

12 The normal filing deadline was the first Wednesday of the 
previous December. Commonwealth at Massachusetts, Rules of the 
Senate, House of Representatives, and Joint Rules , Joint Rule 12. 

13 Id. 

14 Peabooy testimony, P. A. 3/25/78 at 22. 

15 Handwritten note dated Thursday, February 15 [1570] at the 
bottom of memorandum dated February 17, 1970 from Gov. [Endicott] 
Peabody to Mr. [Jeremiah] Lambert, re: "MBM Fee - University of 
Massachusetts . " 

1 6 Letter dated February 19, 1970 from Endicott Peabody to Gerald 
McKee, Jr. 

1 7 Letter dated February 24, 1970 from Gerald McKee, Jr. to 
Endicott Peabody. 



136 

"I was delighted at the notice that the proposed 
legislation will not be reported out. I do not know how 
much of the background of this matter you know, but [EBC 
Director Poitrast's assistant] Fred Kussman or I will be 
happy to fill you in before you talk to Speaker Bartley." 



18 



Peabody's time records reflect a call to Bartley on March 11, 1970, 
Feabody has testified that he telephoned Bartley on that day to make sure that 

1 9 

the Fallon bill was not reported out of the Rules Committee. The bill did, 
in fact, die in the Rules Committee. 

Although the Fallon bill had been withheld from consideration on the merits 
by the Legislature for 1970, there was no guarantee that the Fallon bill or some 
similar bill would not be filed in a timely fashion for the 1971 legislative 
session. As previously noted, one of the reouirements that the Fallon bill would 
have imposed was that engineering functions on the UMass/Boston project be 
performed only by registered engineers or registered architects. None of the top 
MEM officials on the project or in MBM's New York office would have Qualified on 
that basis, as mentioned above. Moreover, McKee for one was not convinced that 

he could pass an engineering examination, at least not without taking substantial 

20 
time away from MEM business in order to study for the examination. 

MEM decioed in 1970 to seek a Massachusetts engineering license for the 



t irm 



21 



MBM had obtained an engineering license in New York in 1967 by 

22 



acquiring a defunct firm that possessed an engineering license. " For 
Massachusetts, however, it was necessary to designate someone as MBM's "chief 
enoineer" and have that individual's personal engineering license serve as the 



basis for the firm's obtainino an enaineering license 



23 



18 Peabody law firm MEM tub card IV, entry for 3/11/70. 

I 5 Feabody testimony, F.A. 3/29/78 at 132. When Commission staff interviewed 
David Bartley in 1979, Eartley said that he had no recollection of Peabody's 
having contacted him in 1970 about the Fallon bill. Notes of 10/16/79 interview 
of David M. Bartley by Special Commission staff, at 2. 

20 Letter dated December 1, 1970 from Gerald McKee, Jr. to Jeremiah D. 
Lambert, re: "Engineering License in Massachusetts." 

21 See letter dated November 27, 1970 from MBM attorney Hartley J. Chazen to 
Jeremiah D. Lambert, concerning a Massachusetts engineering license. 

22 MBM SEC Registration Statement, Amendment 1, filed July 25, 196S, at 3. 

2 3 G.L. c.112 s.eiF(f). See also letter dated December 7, 1970 frcrr Jeremiah 
D. Lambert to Gerald J. [sic] McKee, Jr. 



139 
Stanley Davis, who worked for MBM in 1970, testified to the Commission that 
he was asked to apply for a Massachusetts engineering license which would serve 
as the basis for an MBM Massachusetts engineering license. Davis was both a 

25 

registered architect and a registered engineer. Davis testified that he 
refused to participate in such an exercise, since he was not actually working on 
the UMass/Boston project and since he was not acting, even in New York, as "chief 
engineer . " 

Another MBM employee who was a registered engineer was Paul Spindel. z 

Spindel was the head of MBM's computer operations and was not, according to 

28 
Spindel, actively spending much time working as an engineer. He also was 

based in New York, working on the UMass/Boston project only one or two days per 



month 



29 



Spindel agreed to accept the title of "chief engineer" and to obtain 
a Massachusetts engineering license. He was assisted in his application by 
the Peabody firm. 31 Spindel left MBM in 1971. 32 Spindel says that he left 



because he became uncomfortable with MBM's methods of operation. 



33 



24 Davis testimony, Sp. Comm. 5/29/80 at 9. 

25 Davis 12/11/79 interview, at 5. 

26 Davis testimony, Sp. Comm. 5/29/80 at 9. See also Davis 12/11/79 
interview, at 1. 

27 Notes of 11/11/79 interview of Paul D. Spindel by Special Commission staff, 
at 1. 

28 id. 
2 * Id. 

30 Id. 

31 Letter dated February 10, 1971 from Paul D. Spindel's secretary Joanna 
Raymond to Jeremiah D. Lambert, concerning Spindel's background and professional 
qualifications; letter dated February 18, 1971 from Peabody law firm attorney 
Roger M. Golden to Amos E. Kent, Chairman of the Board of Registration of 
Professional Engineers, making an application on behalf of Paul D. Spindel "to 
practice professional engineering" in Massachusetts; letter dated February 25, 
1971 from Jeremiah D. Lambert to Paul D. Spindel, enclosing a temporary 
registration permit to practice engineering in Massachusetts; letter dated March 
3, 1971 from Paul D. Spindel to Jeremiah D. Lambert, thanking him for his help in 
obtaining MBM's temporary permit. 

32 Spindel 11/11/79 interview at 1. 

33 Id. 



140 
The Newspaper Articles in 1971 
Criticizing MBM's 
UMass/Boston Contract 



Scarcely a year after the Fallon bill was disposed of, MBM faced a new and 
more serious challenge. It began with a series of newspaper articles by a 
syndicated columnist named Wendell Woodman, whose articles were carried in many 
newspapers outside of Boston. The articles were highly critical of MBM's 
UMass/Boston contract. Since the articles led to the formation of the 
DiCarlo-Sirianni committee -- starting the chain of events which led to the 
DiCarlo-MacKenzie trial, the Post Audit hearings, and the creation of the 
Commission -- the Commission attempted to determine what inspired Woodman to 
write about MBM in the first place. 

The answer, it seems, is twofold. First, Woodman had long been concerned 
with UMass/Boston and, in particular, with the safety of the Columbia Point 
site. Woodman was convinced that there was a serious risk that the entire 
UMass/Boston campus might explode as a result of methane gas deposits under the 
surface of the land-filled Columbia Point site. Woodman was not alone in this 
concern, since the Legislature ordered methane studies in 1970 before permitting 



UMass/Boston construction to proceed 



35 



Although the methane consultants 

36 



concludeo that the problem was manageable, Woodman was not persuaded. Thus, 

-in 

any means to slow or halt the UMass/Boston project seemed worthwhile. 



34 .. 
Wen 

Col umbi 

"Columb 

News Se 

of Wend 



35 



36 



37 



Act 



Woo 



Woo 



dell H. Woodman, "UMass Trustees Knew of Methane Concentrations at 
a Point," New England News Service Release dated July 16, 1970, and 
ia Point Out as Campus Site, Watertown Land Is Bought," New England 
rvice Release dated July 17, 1970. See al so notes of 10/11/79 interview 
ell H. Woodman by Special Commission staff, at 1. 

s of 1970, c. 633, approved August 7, 1970. 

dman, "Shavings by Woodman," 4/1/77 at 3. 

dman 10/11/79 interview, at 3. 



141 

Second, Woodman found a willing researcher in another individual who had his 

own reasons for wanting to see articles critical of MEM. William F. McDermott, 

an MDC employee who had been appointments secretary to Governor John A. Volpe and 

a campaign and staff assistant to Republican United States Representative 

38 39 

Margaret Heckler, wanteo to do anything he could to hurt MEM. His 

motivation was personal: the woman he had been seeing had left him for a man who 

a n 
had a high position on MEM's project management team. Since the woman also 

worked for MEM as a secretary, McDermott had additional reason for wanting to 

harm MBM. 42 

The foregoing information was derived from interviews with Woodman, 

McDermott, and the woman friend. The Commission considered the possibility that 

McDermott may have had some political motivation -- such as helping Albert Manzi 

(whom McDermott knew from the Volpe governorship) put pressure on MEM. The 

Commission could find no evidence to support or refute such a political 

consideration. McDermott agreed to be polygraphed on the subject by a 

mutually-agreed-upon examiner, and the examiner concluded, after administering 

the tests, that McDermott was telling the truth about having been motivated only 



by revenge against his former woman friend 



hb 



36 Notes of 9/28/79 interview of William F. McDermott by Special Commission 
staff, at 1. 

39 id. at 2. 

4° Notes of 5/22/80 interview of McDermott's woman friend, at 1. McDermott 
5/23/8C interview at 3. 

41 MEM New England Regional Office Personnel List. 

42 McDermott 9/26/79 interview, at 2. 

43 Id. at 2-3. 

44 Report oated June 2, 1980 of polygraph examination extended to William F. 
McDermott on June 2, 1980, prepared by Eoward J. McGrath, staff examiner for 
Scientific Security -- Raymond S. August, Inc. The polygraph examination 
included the following Questions: "Did you withhold from the Special Commission 
the true reason you gave that MEM contract to Woodman?" "Did you lie to the 
Special Commission Attorneys about the real reason you gave Woodman that MEM 
contract?" "Did you give Woodman that MBM contract, because a political figure 
asked you tc oo so?" The examiner concluded that the examination supported the 
truthfulness of McDermott's "no" answers to these Questions. 



142 
McDermott obtained a copy of the MBM-UMass/Eoston contract on January 2e, 
1971 from the State Comptroller's office. 5 According to McDermott, one of the 
Comptroller's assistants commented at the time that it was "about time that 
someone looked at that contract." McDermott began to prepare a "research 

dossier" containing information about MEM. MBM somehow obtained a copy of 

Zip 

According to notes of a 1975 

49 



this "black book" before the end of 1971 

interview of MBM Vice President Jack Thomas by an MBM lawyer, 



"Peabody's old driver, Eddie Carroll ... stole book for 
Peabody and sent it to Jack Thomas." 

50 
Carroll denied that, when questioned by Commission staff. McDermott wanted 

his former woman friend to feel that he was in a key position in regard to MBM's 

fate, so he sent her advance copies of the Woodman articles. Thus, MBM was 

able to start reacting even before the articles appeared in print. Before a 

discussion on MBM's response to the articles, it is worthwhile to consider what 

the articles said. 

The Woodman articles comprised a five-part series entitled "Let Me Call You 

Sweetheart . " 5z Their theme was that MBM had obtained an unprecedented and 

outrageous sweetheart contract for work at UMass/Boston. In the first article, 

Woodman charoed that the contract had been "necotiated (or not neootiated) 



45 Memorandum dated January 28, 1971, from Tina Giardiello to M. Joseph 
Stacey, Comptroller. 

46 McDermott 9/28/79 interview at 2. 

kl _Id . ; Woodman 10/11/79 interview at 7. 

4£ Notes of 4/10/75 interview of Jack S. Thomas by attorney Robert G. Smith of 
Monasch Chazen & Stream. 

49 id. MBM voluntarily waived any attorney-client privilege on this and other 
matteTs before the attorney made the records available tc the Commission. See 
letter dated September 13, 1979 from Gerald McKee, Jr. to Arnold C. Stream, 
waiving attorney-client privilege. 

5C Notes of 7/31/79 interview of Edward C. Carroll by Special Commission 
staff, at 4-5. 

51 Interview of McDermott's woman friend. 

52 Wendell H. Woodman, five-part series entitled "Let Me Call You Sweetheart," 
New Enoland News Service release, February 8-12, 1971. 



143 

under circumstances that may generously be described as suspicious" and that an 

analysis of the contract indicated that "there was collusion between the BEC and 

[MBM], and possibly conspiracy." The article added that "one expert" 

[unidentified] had described the contract's fee schedule as "unconscionable." 

Additional charges were contained in the succeeding articles, and the final 

one 5 ^ concluded with the following recommendations: 

"First, the BBC should terminate the contract. 

"The Attorney General should consider what action the 
Commonwealth might take to investigate the possibility of 
collusion or, at worst, criminal conspiracy involved in the 
awarding of the contract. 

"It would be in order for the Legislature to investigate 
how such a preposterous contract could have been agreed to 
by a state agency, and whether the BBC has been guilty of 
misfeasance in delegating its responsibilities to a 
consultant exempted from liability. 

"It would also be in order for the Commissioner of 
Administration to figure out how this gravy-boat contract 
will upset current budget estimates for phase I 
construction costs." 

Although the Woodman articles were inaccurate in some respects, MEM was upset 

and very concerned about the articles. MBM had advance copies of the articles, 

from McDermott, and even before the first article appeared in print McKee called 

Endicott Peabody's partner Jeremiah Lambert and -- according to Lambert's 

contemporaneous memorandum to Peabody -- 

"Jerry [McKee] wants us to call him back right away with 
advice as to steps which might be taken to blunt the effect 
of the articles. He mentioned contacting Governor Sargent; 
I told him you and I would discuss the matter and get right 
back to him." 

On February 8, 1971, the date that the first Woodman article was published, 

Lambert wrote another memorandum to Peabody, reporting on a telephone 

conversation that Lambert had had that day with McKee's assistant, L. Bradford 



53 woodman, "Let Me Call You Sweetheart - I. The back to end contract," New 
England News Service release, February 8-12, 1971. 

54 Woodman, "Let Me Call You Sweetheart - V. A commentary," New England News 
Service release, February 8-12, 1971. 

55 Memorandum dated February 5, 1971 from J.D.L. [Jeremiah D. Lambert] to E.P, 
[Endicctt Peabody]. 



144 



Perkins. 6 According to Lambert's memorandum -■ 



"Brad Perkins . . . said Jerry McKee is very concerned and 
wishes to respond [to the Woodman articles].... 

"I told Brad your initial reaction, as someone seasoned in 
Massachusetts politics, was not to respond immediately, 
since that would tend to heighten the controversy rather 
than muffle it. I did mention, however, that it would be 
worthwhile for MBM to prepare a point-by-point rebuttal for 
possible use in discussions with state officials and 
legislators -- prior to any attempt at public rebuttal. 

"... Erad ... said that he felt Woodman's points could be 
easily enough overcome.... 

"... I realize that you may be sensitive to the political 
overtones of your involvement in the contract's going to 
MEM but do hope you can intervene as necessary." 

It should be noted that the Woodman articles made no mention of Peabody. 

For that matter, Peabody's assistance to MBM in obtaining the contract was denied 

by McKee during the 1977 DiCarlo-MacKenzie trial 5 (although it was mentioned 

CO tQ 

by Peabody); denied by Mansueto at the Post Audit hearings of 1978; and 
denieo again by Mansueto at the 1979 Manzi-Masiello trial even though McKee, 
Peabody, and MEM salesman Martin Heyman had testified at length at the 1978 Post 
Audit hearings about Peabody's having helped MBM win the UMass/Boston 



contract 



61 



On February 8, 1971, Peabody responded to Lambert with a handwritten 
,62 



memoranoum 



saying 



"I will be delighted to work + help on the rebuttal, since I 

know a lot first hand. But my name in print would just put 

more kerosene on the fire so I'll work with you + NYC + Boston 

but from here [Washington, D.C., where Peabody's office was 
located]." 



56 Memorandum dated February 6, 1971 from J.D.L. [Jeremiah D. Lambert] to E.F. 
[Endicott Peabody]. 

57 McKee testimony, 6 DiC 2/1/77 at 3-4, 9-11, 136-137. 

58 Peabody testimony, 7 DiC 2/2/77 at 157; 8 DiC 2/3/77 at 31-32. 

59 Mansueto testimony, P. A. 5/23/78 at 25-27, 39-40; P. A. 6/9/78 at 100. 

60 Mansueto testimony, 5 M/M 2/16/78 at 49; 8 M/M 2/21/79 at 65. 

61 McKee testimony, F.A. 3/22/78 at 18-28. Peabody testimony, P. A. 3/7/78 at 
98-107 and passim . Heyman testimony P. A. 3/6/78 at 17-19, 23-26. 

62 Handwritten memorandum dated February 8, 1971 from "Chub" [Endicott 
Peabody] to "Jerry" [Jeremiah D. Lambert]. 



145 

On February 9, 1971, Peabody met in New York with McKee, Thomas, and McKee's 

New York lawyer. According to Peabody's memorandum about the meeting 63 -- 

"McKee is exceedingly concerned that the series will have an 
adverse effect on [MBM's] future in and out of Massachusetts 
and was anxious to take some action. Alternatives considered 
were : 

"1. Notify the newspaper editors of libel action. 

"2. Obtain an article or a series of articles describing 
the real services MEM is providing and the saving of 
substantial sums of money to the Commonwealth, 

"3. Going to the Governor or the Lt. Governor and taking 
joint action which might involve 1 and 2 above, 

"4. Rebutting fully and in detail the columns of 
Woodman .... 

"... I recommended that [McKee] should go to a Boston 
consultant with a first rate public relations firm.... After 
some consideration I recommended John C. Dowd, St., who is 
head of one of the oldest firms in Boston and has recently 
been public relations counsel tc the Kennedys and their 
campaigns and to John Vclpe in his last campaign for 
Governor.... Further, I suggested I would be willing to 
arrange a meeting for them with Lt . Governor Dwight who was 
Commissioner of Administration and had approved the MBM 
contract on April 27 [ sic ] , 1970. Dwight has the additional 
benefit of being a newspaperman in his own right and would 
probably have good judgment as to how the matter should be 
handled. As for myself I suggested that I would be happy to 
help further in any way and that tc my knowledge MBM had 
nothing to be ashamed of...." 

MBM apparently never did bring the libel action. The Commission does not 
know whether there was a meeting with Dwight. MBM did prepare a written 
rebuttal, and it did engage the Dowd firm. 

It was at about this time that, according to Jack Thomas, Peabody was told 
generally about MBM's other problems in Massachusetts and specifically about the 
MBM corporate checks from October 1970 to Senate President Kevin Harrington and 
(via William Masiello and James Kelly) to the gubernatorial campaign of Kevin 



63 Memorandum dated February 10, 1971 to Mr. [Jeremiah] Lambert from Governor 
[Endicott] Peabody. 

64 See letter dated February 18, 1971 from Gerald McKee, Jr. to Joseph 
DiCarlo, Ralph sirianni, ano William Hogan, with attached documents prepared in 
rebuttal to Woodman's articles. 

65 Letter dated February 12, 1971 from John C. Dowd and Roger Dowd to MEM. 



146 
White. 6 According to Thomas, MBM was advised at that time, perhaps by 
Peabody, that such corporate contributions were illegal and that the checks 
should be removed from MBM's office and placed in a safe deposit box. Thomas 
also has recalled that either at this meeting or shortly thereafter Peabody was 
told of MBM's $10,000 cash payment to Manzi in October 1970, and that Peabody 
said that the MBM check which had generated the cash should go to a safe deposit 
box. DC When the Commission questioned Peabody about these matters in 1980, 
Peabody acknowledged that he had recommended that the Harrington and 
Masiello-Kelly-White checks be placed in a safe deposit box outside of MBM's 

/TO 

office, and Peabody said that he recalled the discussion of those checks 
having occurred in New York on February 9, 1971. But, he testified that he 
was not aware that corporate checks were involved, and that he had suggested 
removal of the checks simply "because of the [bizarreness] of the 
contributions. . . . " 
the Manzi payment during February 1971 

MBM hired the Dowd firm on February 10, 1971, at a fee of $25,000 per year, 
to provide public relations representation in connection with MBM's UMass/Boston 
contract. Dowd quickly went to work on MBM's behalf. According to a 



He also said that he believed that he did not learn of 

72 



66 written statement dated June 12, 1980 executed by Jack S. Thomas in London, 
England, at 1. 

67 Id. 

66 Id. at 1-2. 

69 Peabody testimony, Special Commission 6/19/80 at 166-167. 

70 Id. at 168. 

71 Id. at 159-160. 

72 id. s t 164, 167-168. 

73 Dowd 2/12/71 letter to MBM. The Dowd firm was never paid in full by MBM. 
Shortly after MBM learned that the DiCarlo-Sirianni report would not be critical 
of MBM, the firm decided that it would be unnecessary to continue using -- or 
paying — the Dowd firm. See letter dated October 19, 1971 from Kay Lowenthal, 
on McKee's stationery, to Jack S. Thomas, concerning the termination of the Dowd 
contract. John C. Dowd died in July 1971 and apparently left no notes or 
memoranda about his representation of MBM. 



147 

memorandum dated February 10, 1971 and apparently written by William 
McDermott, Dowd telephoned Eoston Herald publisher John Herbert regarding the 
unfavorable publicity MBM had been getting -- and requested that the Herald run 
what McDermott labelled "a puff piece." The reason why Dowd called Herbert, 
according to McDermott's memorandum, is that Herald reporter Thomas C. Gallagher 
had called BEC Director Walter Poitrast regarding a story that Gallagher was 
going to write about MBM, and Poitrast had reported Gallagher's call to MEM, who 
called Dowd. Dowd's alleged call apparently came too late, because the Gallagher 
story ran on the Herald ' s editorial page the following day. 

The Gallagher article stated that there were "estimates that [MBM] would 
ultimately reap fees in excess of $30,000,000 by the time the entire university 
complex is finished." Gallagher reported, further, that three state legislators 
had drafted an order calling for a legislative investigation of MBM's 
UMass/Boston contract. 

We turn now to a consideration of that order and the legislative 
investigation that resulted. 



The Investigation in 1971 
by a Special Legislative Committee 
Chaired by Senator Joseph J.C. DiCarlo 
and Representative Ralph L. Sirianni, Jr 



The Filing of an Order 
by DiCarlo, Sirianni, and 
Represenati ve William F. Hogan 
Calling for an Investigation 
of MBM T s UMass/Boston Contract 

Wendell Woodman anc William McDermott had not left to chance whether there 

would be a legislative investigation of the MBM contract. They had not only 

sought to provoke legislative action through the "Sweetheart" series, but they 

had also attempted to recruit the legislators to head up the investigation. Even 

before the first Woodman article appeareo in print, Woodman and McDermott met 

with Representative Ralph L. Sirianni, Jr. to suggest a legislative investigation 

of the MBM contract. After persuading Sirianni of the merits of such an 



7Z * Handwritten memorandum dated February 10 [1971] heaoed "Gallagher," 

probably in the handwritino of William F. McDermott. McDermott 9/2£/79 interview 

at 2. 

75 Thomas C. Gallaaher, "Concerninq Consultants," Boston Herald Traveler, 
February 11, 1971, at 16. 

76 Testimony of Ralph L. Sirianni, 17 DiC 2/16/77 at E-9. Woodman 10/11/79 
interview at 5. 



148 

investigation, Woodman and McDermott, accompanied by Sirianni, met with 
Sirianni's friend, Senator Joseph J.C. DiCarlo, to ask him to co-sign the bill 
("order") calling for such an investigation. 77 

DiCarlo, only 35 years old, was in his first term as a State Senator, having 
previously served in the State House of Representatives along with Sirianni. ' e 
DiCarlo had supported Kevin Harrington in the January 1971 contest for State 

7 C 

Senate President — the Commonwealth's highest legislative position -- and 

Harrington's success augured well for DiCarlc. According to DiCarlo, Harrington 
hao promised DiCarlo late in 1970 that DiCarlo would be brought along ouickly, 
first as Chairman of the Senate Committee on Counties, then as Senate Majority 
Whip ("Assistant Majority Leader"), then as Senate Majority Leader, and finally 



-- in just a few years -- as Harrington's successor as Senate President 



80 



In 



January 1971, DiCarlo was named Chairman of the Committee on Counties, and before 
1971 was out, DiCarlo became Senate Majority Whip. It was clear in the 
Legislature that DiCarlo's star was in the ascendant. 

DiCarlo agreed to co-sign the order calling for a legislative investigation 

£2 

of MEM's UMass/Boston contract. The proposed order was also co-signed by 

Rep. William F. Hogan (D-Everett), whose desk at the State House was in the same 
area as Sirianni's. 

The proposed order, filed on February 11, 1971, called for a special 
leaislative committee to be established for the exclusive purpose of 



investigating MBM ' s UMass/Boston contract 
i ntensi f i ed threat . 



64 



MBM reacted quickly to this 



77 Sirianni testimony, 17 DiC 2/16/77 at 7. 

78 Sirianni testimony, 17 DiC 2/16/77 at 5. 
75 DiCarlo 12/6/78 interview at 1. 

60 DiCarlo testimony, Sp. Comm. 6/3/80 at 50; DiCarlo 12/6/76 interview at 1. 

81 DiCarlo testimony, Sp. Comm. 6/3/80 at 90, 92. 

82 Sirianni testimony, 17 DiC 2/16/77 at 7; DiCarlo 12/8/78 interview at 2. 

63 Notes of 10/24/79 interview of Ralph E. Sirianni, Jr. by Special Commission 
staff, at 1. 

8 ^ House Order 5086; Journal of the House of Representatives, 1971, at 764. 



us 



The February 1971 
Meeting at DICarlo's Home 

On February 12, 1971 Endicott Peabody came to Eoston and billed MBM for 12 
hours of work. 85 His billing record for MBM for February 12, 1971 says: 
"Boston -- all day conference -- Speaker -- Zabriskie -- DiCarlo." Peabody 
testified that he did not meet DiCarlc on February 12, 1971, although he tried to 
make contact with DiCarlo. 87 Peabody's billing record may reflect a discussion 
on that date about DiCarlc. 

Peabody and DiCarlo did, however, meet at DiCarlo's house in Revere later in 



February of 1971 



88 



The meeting apparently took place on Sunday, February 21, 



1971 



89 



DiCarlo recalls the meeting as having taken place on that date 



90 



and Peabody has agreed that the meeting may have occurred then.- - - 1 A Hertz car 
rental agreement signed by Peabody is dated February 21, 1971 and contains 
mileage (33 miles) consistent with a round-trip drive between the rental site 
(Logan Airport) and DiCarlo's home (in Revere). Also tending to support February 
21, 1971 as the date of the meeting is the possibility that the meeting 



85 Peabody daily office record, 2/12 [1971]. 

86 id. 

87 Peabody testimony, 8 CiC 2/3/77 at 71, 100. 

68 DiCarlo testimony, Sp. Comm. 4/7/80 at 29; Peabody testimony, 7 DiC 2/2/77 
at 171-182. 

85 See Hertz car rental agreement dated February 21, 1971, signed by Endicott 
Peabody, for a car rental at Logan Airport. See further discussion below. 

90 DiCarlo 12/8/78 interview at 3. 

91 Peabody testimony, 7 DiC 2/2/77 at 181-182; 8 DiC 2/3/77 at 106. DiCarlo 
has repeatedly insisteo that Peabody testified that the meeting occurred on 
February 18, 1971 -- and that that constituted perjury. See , e.g. , DiCarlo 
12/8/78 interview at 4-5. Peabody clearly stated that the meeting occurred 
either on February 21, 1971 o_r on February 18, 1971. See , e.g. Peabody 
testimony, 7 DiC 2/2/77 at 181-182; 8 DiC 2/3/77 at 106. MBM President Gerald 
McKee, Jr., unlike Peabody, did mention only February 18, 1971 as the date of the 
meeting. McKee testimony, 6 DiC 2/1/77 at 138. But even if McKee was mistaken 
about the date, there is evidence, discussed below, that McKee was in the Boston 
area on February 21, 1971 and thus could have been present at DiCarlo's house on 
February 21, 1971. 



150 
rrsy have been arranged by Senate President Kevin Harrington •, ^ Peabody's MBM 
time record for February 1571 lists a contact with Harrington only on February 
20, 1S71. 93 

There is great disagreement between DiCarlo and Peabody, however, about what 
DiCarlo said at the meeting and whether MBM President McKee was present. 
According to DiCarlo, DiCarlo treated Peabody with great deference when they met 
on February 21, 1571, and Peabody merely exchanged pleasantries with DiCarlo's 
family and left off some information about MBM. Peabody testified, by 
contrast, that DiCarlo used vulgarities and told Peabody that it would just be 
too bad if MBM got hurt, but that DiCarlo intended to advance his own political 



ambitions by conducting hearings that would embarrass Donald Dwight 



55 



Peabody 



testified that McKee was present at the DiCarlo-Peabody meeting 



56 



McKee 



testified consistently with Peabody's testimony, adding that DiCarlo's attitude 

57 
and manner made McKee fearful for MBM's future. 

DiCarlo has claimed that Peabody and McKee committed perjury not only in 

describing what DiCarlo said on February 21, 1571, but also in saying that McKee 

90 

was present. DiCarlo says that Peabody and McKee lied in order to enable the 
prosecutor at the DiCarlo-MacKenzie trial to get the damaging Peabody-McKee 

oo 
testimony about the February 21, 1571 meeting admitted into evidence." 

It is true that Judge Skinner ruled, at the DiCarlo-MacKenzie trial, that the 

McKee-Peabody testimony about the February 1571 meeting at DiCarlo's house was 

admissible only to show McKee's "state of mind" regarding the alleged extortion 



92 Peabody testimony, 8 DiC 2/3/77 at 55-96. 

53 Peabody law firm MBM tub cards XIV and XV, for February 1971. 

94 DiCarlo 12/6/78 interview at 3-4. 

55 Peabooy testimony, 7 DiC 2/2/77 at 175-177; 2/3/77 at 62. 

56 Peabody testimony, 7 DiC 2/2/77 at 171-175. 

57 McKee testimony, 3 DiC 1/26/77 at 126-132, 4 DiC 1/27/77 at 4. 

98 DiCarlo testimony, Sp. Comm. 4/7/8C at 29; DiCarlo 12/8/78 interview at 3-5 

55 DiCarlo 12/8/78 interview at 4-5. 



151 
that later took place. °0 Thus, if McKee had not testified that he was present 
at the February 1571 meeting, all (Feabody's) testimony about the meeting would 
have been inadmissible. 

Eut there are several reasons to doubt DiCarlc's assertions about what 
happened on February 21, 1971. First, DiCarlo has repeatedly insisted that McKee 

was not in Massachusetts on February 21, 1971 and thus could not have come to 

l r i 
DiCarlc's house that day. But DiCarlo has offered no proof that McKee was 

anywhere else on that day, and the Commission has found MBM, telephone records 

which show a telephone call made from Hyde Park, Massachusetts on February 21, 

i no 
1971 and charged to McKee's personal telephone credit card. Second, DiCarlo 

has claimed that Peabody and McKee were lying about DiCarlo saying that he wanted 

to run for Lieutenant Governor against Donald Dwight. ^ DiCarlo has insisted 

that everyone knew in 1971 that DiCarlo was aiming toward becoming Senate 

President and had no interest in the Lieutenant Governorship. But the 

Commission has found newspaper articles by several reporters who wrote, in 1971, 

that DiCarlo was thinking of running for Lieutenant Governor against 

Dwight. Moreover, both former Rep. J. Hilary Rockett (in an interview) and 



William V. Masiello (in testimony) told the Commission that DiCarlo had told them 
in 1971 that he was planning to run fcr Lieutenant Governor. Third, 
Peabody's contemporaneous handwritten notes (contained in a spiral steno 



100 Instruction of the Court, 4 DiC 1/27/77 at 4. 

101 Defendants' Motion for a New Trial, United States v. DiCarlo, MacKenzie , at 5 
DiCarlo testimony, Sp. Coiran. 4/7/80 at 29. 

102 ^ibm telephone records. 

103 DiCarlo 12/8/78 interview at 5. 

104 id, 

105 See , e.g. , Thomas C. Gallaoher article, Boston Herald Traveler, May 13, 
1971. 

106 Notes of 10/17/79 interview of former Representative 3. Hilary Rockett by 
Special Commission staff, at 1; William Masiello testimony, Sp. Comm. 6/24/80 at 
43. 



pad) 



107 



152 

support the Peabody-McKee version of the conversation: 

"Eall game -- not going to play. Next step -- Regret. 

"Play it straight. Do something. Consider effect of having 
press conference. Making available to press. Try Dowd. 

"Mid[dlesex] Court House -- 

"DiCarlo everything he can do to hurt us. Know the 
[contract] was straight. More than counterpunch. 

"Jerry McKee. 

"How when — What Reason[?] 

"Letters to the Editor." 
Finally, it must be observed that it would appear to be far more in DiCarlo's 
interest than in Peabody's or McKee's to lie about the February 21, 1971 
meeting. And DiCarlo's admissions to the Commission that he accepted cash from 
MBM demonstrate that DiCarlo has been willing to lie in the past about MEM -- 
such as in DiCarlo's 1977 post-conviction speech to the State Senate in which 

1 no 

DiCarlo insisted that he had not taken one cent from MBM.- 100 

Changes in the Wording of the 
Order Calling for an Investigation 
of MEM's UMass/Boston Contract 

Having failed to dissuade DiCarlo from investigating MBM's UMass/Eoston 

contract, Peabody pursued efforts that he had already commenced tc alter the 

language of the proposed legislation establishing an investigative committee. 

Peabody attempted to persuade Representative Paul Murphy, chairman of the Joint 

1 no 

Rules Committee, to delete the legislation's specific mention of MBM. -"-'-" As 
Peabody explained to the Commission, MBM believed that MEM's competitors would be 
able to use the legislation, as originally drafted, to hurt MBM's business in 
other states. Thus, Peabody wanted all references to MBM eliminated, with 



107 Memorandum undated (but after February 16, 1971) in Peabody's spiral steno 
pad. 

108 Journal of the Senate, 1977, I, at 338. See also what appears to be a 
transcript of DiCarlo's speech, Boston Globe, March 28, 1977 (P.M. edition). 

109 Peabody testimony, Sp. Comm. 6/19/80 at 177; Feabody law firm MBM tut card 
XV, entry for 2/16/71. 

110 Peabooy testimony, Sp. Comrr. 6/19/8C at 177. 



153 
descriptive or generic terms substituted. ** Peabody's effort in this regard 

proved successful. When the Masschusetts House of Representatives adopted the 

112 
legislation on March 1, 1971, all specific mention of MBM was gone. 

The House then referred the legislation to the State Senate, and on March 2, 

1971 the State Senate referred it to the Senate Ways and Means Committee. 

The Senate Ways and Means Committee was chaired by James A. Kelly, Jr., at whose 

suggestion MBM had made $2,00C contributions to Kevin Harrington and (indirectly) 

to Kevin White in October 1970. 11A MBM thus had reason to hope that the 

DiCarlo-Sirianni-Hogan legislation could be scuttled in committee, which is what 

had happened to the Fallon bill (in a different committee) the year before. 

MBM's Discussions with 
Kelly about the 
DiCarlo-Sirianni-Hocan Legislation 

James A. Kelly, Jr. had, like DiCarlo, gained his chairmanship as a result of 

1 1 c 
supporting Kevin Harrington's bid for the Senate Presidency. " As head of the 

Senate Ways & Means Committee, Kelly had the opportunity to play a major role in 



influencing legislation that could affect the profits of private companies. 



116 



Kelly had no fondness for Endicott Peabody dating back to Peabody's days as 
Governor. Thus, it was left to MBM Vice President Anthony Mansueto to deal 
with Kelly. 

Mansueto had met with Kelly on February 23, 1971 in reference to the DiCarlO' 



HI Id. 

11^ See House of Representatives Order 5086, dated March 1, 1971; Journal of 
the House of Representatives, 1971, I at 822. 

113 Journal of the Senate, 1971, I at 749. 

114 See discussion of these checks in Chapter V supra . 

115 Kelly testimony, P. A. 5/12/78 at 54 ; William Masiello testimony, Sp. Comm, 
6/24/80 at 17. 

H£ See the sections on Kelly and the Masiello brothers, in Volume 5 of this 
Final Report. 

II" 7 DiCarlo 12/8/78 interview, at 6-7. 



154 

Sirianni-Hogan legislation. 1 - 18 The meeting took place at Sablone's Restaurant 
in East Boston, and William Masiello and lobbyist Charles Kougeas were also 

119 

present (according to Masiello's testimony). During the course of the 
discussion, Masiello has testified, Mansueto wanted to know what the $4,000 of 

contributions that MBM had made at Kelly's request in October 1970 would "buy" 

l ?n 
MEM in regard to the DiCarlo-Sirianni-Hogan legislation.^ Mansueto and 

Masiello both agree that Kelly said that he would look into the 

DiCarlo-Sirianni-Hogan legislation and meet with Mansueto in Florida during March 

of 1971. 121 Mansueto and Masiello also have testified that Kelly said that MEM 

should not use Peabody on the DiCarlo-Sirianni-Hogan legislation and/or 

l ?? 

investigation . x 

Mansueto telephoned Peabody after the meeting, and Peabody wrote a 

1 23 
memorandum -1 about the conversation. According to the memorandum, Kelly had 

made the following points at the luncheon meeting with Mansueto: 



"1. Why are we upset? They did not start it. Someone 
spoke to Woodman. They are trying to control it but it is a 
problem. Some people don't want UMass to happen. DiCarlo has 
ambitions. By seeino DiCarlo ourselves we made it difficult for 
Kelly. 

"2. I [Peabody] should not be in the case openly.... 
People say I have political ambitions and they don't trust me 
and I should stay out of the case. MBM should hire a Eoston 
attorney.... He [Kelly] will call Mansueto and tell him who is 
best for them. 



116 Mansueto pocket calendar, 2/25/71; William Masiello testimony, Sp. Comm. 
6/24/80 at 37-38. 

115 William Masiello testimony, Sp. Comm. 6/24/80 at 36; notes of 4/26/79 
interview of William R. DiMento by Special Commission staff; Mansueto pocket 
calendar, 2/25/71. 

1 2C Id. at 38. 

1 21 Id.; Mansueto testimony, 9 DiC 2/4/77 at 18, 39-40. Kelly has denied 
this. Kelly testimony, P. A. 5/12/78 at 61-83, 102. 

122 William Masiello testimony, Sp. Comm. 6/24/80 at 38; Mansueto testimony, 9 
DiC 2/4/77 at 39. 

123 Memorandum dated February 25, 1971 from Endicott Peabody to Jeremiah D. 
Lambert . 



155 

"3. There will be a private investigation of the matter. 
MEM will probably be called. Provided MEM works closely with 
him, they will go on and he can see $10 million in fees -- 
possibly the Worcester Center." 

The reference to the "Worcester Center" probably has to do with UMass/Worcester 

and the bill that Kelly filed in October of 1970 apparently for the purpose of 

helping MEM obtain a contract at UMass/Worcester. Peabody's memorandum 

concluded : 

"Mansueto feels that he, McKee ano I should sit down next 
week and appraise the situation in light of the then 
circumstances . " 

As previously mentioned, the DiCarlo-Sirianni -Hogan legislation was referred 

to Kelly's Ways & Means Committee on March 2, 1971. It was still pending there 

on March 16, 1971 when Mansueto flew to West Palm Beach, Florida, " where 

Kelly was staying. 26 In a memorandum dated March 16, 1971, Peabody's partner 

Jeremiah Lambert wrote to Peabody:- 1 

"I spoke to Jerry [McKee] a few minutes ago (4:15 P.M.). He 
indicates that Tony may have other good reasons to be in 
Florida when Kelly is there; and, at risk of exacerbating the 
situation, he believes, as does Tony, that Tony should see 
Kelly. Jerry remains firm in his view that we should continue 
to represent MBM. He said Tony will note simply that our 
firm, and yourself, have been in on this matter from the 
beginning and should not be dropped now. I detect no lack of 
confidence in you or us. 

"Jerry suggests that Thursday would be better for a meeting 
than Friday -- either here or in New York. I'd like to 
confirm a Thursday date. What is your preference as to time 
and location?" 

Peabody responded to Lambert with a hano written n o t e : 1 2 8 

"My advice not to see him is that Kelly will only make him 
feel worse. At some point you have to go your own way -- 
politely and we have passed that point." 

On March 17, 1971 Mansueto met with Kelly in Florida. Mansueto 
has said that William Masiello was present, which both Kelly and 



124 See discussion in Appendix C of MEM's attempt to win s project management 
contract at the UMass/Worcester Medical School. 

125 Mansueto testimony, 9 DiC 2/4/77 at 43. 

126 Mansueto testimony, P. A. 5/23/76 at 63-66. 

127 Memorandum dateo March 16, 1971 from J.D.L. [Jeremiah C. Lambert] tc E.F. 
[Endicott Peabody], with Peabody's handwritten response. Emphasis omitted. 

126 id. 

129 Mansueto testimony, P. A. 5/23/78 at 62. 



156 
Masiello have denieo. Masiello has shown the Commission some gasoline charge 
slips which are dated March 16 and 17, 1971, signed by Masiello, and imprinted as 
being from gas stations in Massachusetts . I- 51 Thus, Masiello has some support 
for his statement that he was not present at the March 17, 1971 meeting in 
Florida with Mansueto and Kelly. 

According to Mansueto's testimony at the DiCsrlo-MacKenzie trial, Kelly said 
at the March 17, 1971 meeting that MEM could obtain favorable treatment from 
DiCarlo if MBM would come up with $100,000 to help DiCarlo put his children 



throuoh school 



132 



Mansueto testified that he was shocked at this 



demand/reouest , and that he telephoned McKee, who rejected the demand/reouest out 

of hand. Mansueto further testified that rather than break off 

relations with Kelly, he temporized, saying: "For Chrissake, ... I can't do this 

1 1 c 

by myself." Mansueto also testified that he told Kelly words to the effect: 

"Holy Hoses, Jim, we are not a bottomless barrel." 

Mansueto testified, in addition, that Kelly threw in a reauest for himself -- 
namely, that MEM hire Kelly as an accountant (as the Masiello firm had 
done). 137 

DiCarlo, in interviews with Commission staff, has insisted that he had no 
discussions with Kelly about getting money from MBM in regaro to the proposed 



legislative investigation. 



136 



Indeed, DiCarlo has sucgestec that if Kelly made 



130 Mansuetc testimony, 9 DiC 2/4/77 at 46; P. A. 5/23/78 at £6; William 
Masiello testimony, Sp. Comm. 6/24/80 at 39-41; Kelly testimony, P. A. 5/12/78 at 

84. 

131 William Masiello testimony, Special Commission 6/24/8C at 39-41. 

132 Mansueto testimony, 9 DiC 2/4/77 at 47-48. 

133 id. at 46-49. 

134 id. at 48. 

135 _id. at 49. 

136 id. 

137 William Masiello testimony, Sp. Comm. 5/13/80 at 56. 
136 DiCarlo 12/8/78 interview. 



157 
any demand or request for $100,000 on March 17, 1971, Kelly was doing so 
on his own account, not DiCarl o ' s . ^9 

It should be noted in this connection that Kelly not only had the power on 
his own to scuttle the DiCarlo-Sirianni-Hogan legislation (which was in Kelly's 
committee) on March 17, 1971, but that Kelly also was being asked by MEM to push 
for passage of a bill that Kelly had filed in October 1970 which would have 
assisted MBM in its efforts to win a large contract at UMass/Worcester . 

In any event, Mansueto has testified that he saw Kelly about a week after the 

March 17, 1971 meeting, 1Zl ^ and MBM records reveal short telephone calls to 

Kelly's State House office on March 23 and March 24, 1971. 142 Whatever 

negotiations there may have been apparently broke down; on March 25, 1971 Kelly's 

committee issued a report calling for adoption of the DiCarlo-Sirianni-Hogan 

order. 1A3 On March 29, 1971, the full State Senate adopted the order, 1AZt 

completing the legislative process to establish a special committee to 

investigate MBM ' s UMass/Boston contract. 

The Selection of Members 
for the Committee 

With the legislation having been passed to establish a special legislative 

committee tc investigate MBM's UMass/Boston contract, MBM turned its attention to 

the selection of members for the committee. Peabody had already spoken with 

1 46 
Kevin Harrington, according to Peabody's testimony. As Senate 

President, Harrington was to name the three Senate members of the 



139 id„ 

140 See discussion of MBM's attempt tc win the project management contract at 
uMass/Wcrcester in Appendix C. 

1^1 Manuseto testimony, P. A. 5/23/76 at 71. 

142 mbm telephone records. 

143 Journal of the Senate, 1971, at 904. 

144 _id. at 915. 

145 Although the wording of the order had been changed, as discussed above, 
the order still clearly called for an investigation of MBM's UMass/Boston 
contract. MBM simply was not mentioned by name. 

146 Peabody testimony, e DiC 2/3/77 at 95-96. 



156 
special committee. 1 ^ 7 On March 31, 1971, Harrington appointed DiCarlo as 
Senate Chairman of the committee, and Harrington also named George Kenneally and 
Robert Cawley to the committee . 1Ae 

All three senators appointed by Harrington to the committee were Democrats. 
The failure to appoint even a single Republican was criticized as unprecedented 
by the Republicans, who immediately started pressing for legislation to reouire 
that the committee be enlarged to include a fourth senate member who would have 

] 45 

to be a Republican. The proposed order to accomplish this change died 
quietly in the House. 

As to the three Democratic senators who were chosen, DiCarlo had, of course, 
sponsored the order creating the committee. DiCarlo, however, was on the 
threshold of political power, and his rise was dependent upon Kevin 
Harrington. George Kenneally had been Peabody's Suffolk County Coordinator 
in Peabody's 1964 gubernatorial primary campaign. During the course of the 
DiCarlo committee's investigation, Feabody wrote the following in a note to 
himself: "Kenneally last night - Primary goal to protect EP."- l5/ ( Note : "EP" 
is how Endicott Peabody was often referred to in internal Peabody law firm 
memoranda.) Robert Cawley also was friendly to PeaboOy. " 



I* 7 House Order 5086 

1*2 Journal of the Senate, 1971, at 940-941. 

149 Proposed order filed by Senator David Locke, adopted by the Senate April 
1, 1971. Journal of the Senate, 1971, at 947. 

1 50 DiCarlo 12/8/76 interview, at 1. 

151 Notes of 10/25/79 interview of George V. Kenneally by Special Commission 
sta f f , at 1 -2 . 

1 52 hanawritten memorandum dated 5/12 [1971] of Endicott Peabody, concerning 
what appears to have been a telephone conversation with Jack Thomas. 

153 Kenneally 10/25/79 interview at 3. Cawley stated that he had only a 
political relationship with Peabody. Notes of 10/23/79 interview of Robert L. 
Cawley by Special Commission staff, at 1. 



159 

The House members of the special committee to investigate MEM's UMass/Boston 
contract had not yet been appointed. Their selection was the prerogative of 
House Speaker David M. Bartley, whose role in regard to the Fallon bill a year 
earlier has been discussed above. 

In an interview with Commission staff, Bartley said that Peabody had 
contacted Bartley in February 1971 to try to persuade Bartley to ouash the 
DiCarlo-Sirianni-Hogan legislation. 5 Peabody's MBM billing records indicate 
a meeting with Bartley on February 12, 1971 1 ''" -- the day after the 
DiCarlo-Sirianni-Hogan legislation had been filed. And a Wendell Woodman news 
article published on February 22, 1971 reported that Eartley was "under 
tremendous pressure [from Peabody] to scuttle [the] investigation." 
Peabody, in testimony before the Commission, acknowledged contacting Bartley in 

[February] 1971 but said that their conversation was about changing the wording 

157 
of the DiCarlo-Sirianni-Hogan legislation to remove MBM's name. 

In any event, when the time came for Bartley to name the House members to the 

committee, Bartley took Peabody's concerns into account, according to 

Bartley. 5E In particular, Bartley has said that he chose Representative Paul 

Menton because Menton -- whom Bartley described as a lawyer and former FEI man of 



integrity -- was friendly to Peabody. 



159 



By choosing Menton, Bartley felt that 



Peabody's client (MBM) would be assured of getting "a fair shake 
believes that Peabody may have specifically asked that Menton be 



,.160 



Bartley 



154 Notes of 10/16/79 interview of David M. Eartley by Special Commission 
sta f f , at 4 . 

155 Peabody law firm MBM tub card XV, entry for 2/12/71. 

1 56 Wendell H. Woodman, "Probe Order Is Stalled", New England News Service 
release dated February 19, 1971, at 1. 

157 Peabody testimony, Sp. Comm. 6/19/6C at 175-176, 181-182. 

156 Bartley 10/16/79 interview at 4. 

155 _io. at 4-5. 
160 i d . at 5. 



160 
appointed, or that Peabody may have asked for "a friend on the committee , for 
fairness," or that Menton may have asked to be appointed, as Peabody's 
f riend . * 61 Similarly, Bartley has said that his decision not to appoint 

William Hogan to the committee -- even though hogan had been one of the original 

] 62 
signers of the order -- may have been made at Peabody's reguest. in 

testimony to the Commission, Peabody said that he did not discuss the membership 

of the committee with Eartley. Peabody's contemporaneous records indicate 

interest in the membership, however, although they refer to Bartley's deputy 

16 3 
(Rep. Paul Murphy) rather than tc Bartley. Although Bartley, unlike 

Harrington, did appoint one Republican to the committee, the Republican chosen -• 

J. Hilary Rockett (P- Marblehead) -- was closer tc the Democrats on many matters 

1 6 A 
than to the Republicans, according to Rockett. . The other House members 

were Sirianni, who had co-signed the original order and was named House 

chairman; J. Laurence Golden (D-Framingham) ; and James Hart 

(D-Dorchester) . 166 

MEM's Purchase of Tickets 

for House Speaker Bartley's "Brunch" 

Bartley announced his selection of House members for the DiCarlo-Si rianni 

Committee on April 13, 1971. As it happened, Bartley was having a testimonial 

"brunch" on April 25, 1971. According to a newspaper article from April 16, 



161 id. 

162 Id. at 4-5. 

163 Peabody testimony, Sp. Comm. 6/19/80 at 174-175. See also memorandum 
dated April 5, 1971, from Gov. [Endicott] to Peabody tc Mr. [Jeremiah D.] 
Lambert, "Subject: MBM"; letter dated April 13, 1971 from Endicott Peabody to 
Gerald McKee, Jr. 

164 M tes of 10/17/79 interview of J. Hilary Rockett ( P-Marblehead ) -- by 
Special Commission staff, at 1. 

1 65 Journal of the House of Representatives, 1971 at 1216. 

166 i d . 



161 
1971, most of the $100 tickets to the "Brunch for Bartley" were being purchased 
bv "State House lobby ists . "167 it is impossible to verify that report. No 
records were kept to identify the purchasers of the more than $100,000 of tickets 

sold for the "brunch" because, according to Bartley, the law did not require such 

16 8 
records for "private testimonials." Bartley told Commission staff that perhaps 25 

169 
or 30 gifts of $1,000 were made to this testimonial. Bartlev did not recall one of 

170 
those gifts as having come from MBM or Endicott Peabody. Peabody, however, has testi- 
fied that he paid $1,000 for tickets to the "Bartley Brunch" -- and that the money came 
from MBM. 

MBM learned of the "Bartley Brunch" from Peabody . 1 ^2 Peabody's files 

contain a handwritten note from Peabody to his partner Jeremiah Lambert, to whicn 

was attached the April 16, 1971 newspaper article about the "Brunch for 

Bartley." The note from Peabody to Lamoert said: 

"Jerry [Lambert] - I will need to ' hear ' from Tony [Mansueto] 
or Jerry [McKee] about this - this week. I wrote Tony but no 
call. - Chub." [Emphasis in original.] 

MBM did come up with $1,000 for the "Bartley Brunch," and the procedure usea 

to pay for the tickets was descrioed in a contemporaneous memorandum from MBM's 

Boston Regional Manager Jack Thomas to McKee. " The memorandum, dated April 

30, 1971 and labelled "CONFIDENTIAL," is on the "Subject: Speaker Bartley's 

Brunch." The memorandum says: 

"As vou know, we agreed to purchase ten tickets to a recent 
fund-raising affair for the Speaker of the House of 
Representatives of Massachusetts at a price of $100.00 per 



167 Thomas C. Gallagher, "A 'Brunch' for Bartley," Boston Herald Traveler, 
April 16, 1971, at 16. 

168 Bartlev 10/16/79 interview at 5-6. 

169 id. at 6. 

170 Id. 

171 Peabody testimony, Special Commission 6/19/80 at 187-179, 193-194. 

172 i_d. at 187; written statement dated June 12, 1980 of Jack S. Thomas 
executed in London, England, at 2. 

173 "Confidential" memorandum dated April 30, 1971 from Jack S. Tnomas to G. 
McKee, Jr. 



162 

ticket. In anticipation of this, I prepared a check (#3235) 
in the amount of $1,000.00 and handed this check to Endicott 
Peabody with the Payee not indicated. 

"I understand from Chub Peabody that the fund raisers 
preferred to have one of his checks. He, therefore, deposited 
our check in his own account, and purchased the tickets with 
his own check. I believe that our check was made payable to 
'cash' prior to deposit. 

"We will carry this $1,000.00 as a special advance to me on 
our records . " 

The check was in fact made out to cash,!' 7 ' 11 deposited into Peabody's personal 

bank account in Washington, D.C.,!" 7 ^ an d charged on MBM's books as a "special 

advance to Thomas, l 7 ^ Because of a loophole in the law as to "private 

testimonials," this procedure -- which would have been illegal for a "political 

contribution" -- may have been legal for the "Bartley brunch." when asked why 

this procedure was employed, Peabody testi f ied : * 77 

"Well, I ha[d] been representing MBM by that time for two 
years in Boston. I was well known in the State House as tneir 
representative. I believe that were the checK to come from me 
directly to Bartley that I could do more on some future 
occasion for MBM should that occasion occur. In reflection I 
don't think it made a particular world o f difference, I think 
what was important was the $1,000.00 check." 

The Investigation 

Conducted by the 

Pi Car lo-S ] r i ann i Committee 

In testimony before the Commission in 1980, 178 Joseph DiCarlo defended the 

Derformance and final report of the DiCarlo-Sirianni Committee: 

"The report that was filed by me was an honest, innocent 
report as such, as a matter of fact, Mr. Chairman, ... I wish 
to refute, negate, and outright deny that that report was a 
whitewash as it so often has been labelled." 

DiCarlo explained: 1 ' 9 



17/i MBM-Boston check #3235 dated April 21, 1970 payable to cash. 

175 Affidavit dated April 19, 1978 executed by Endicott Peabody in wasnington, 
D.C. , at 2-3. 

176 See Thomas A/30/71 confidental memorandum to McKee. 

177 Peabody testimony, Special Commission 6/19/80 at 189. 

178 DiCarlo testimony, Special Commission A/7/80 at 10. 

179 id. at 11. 



163 

At the time of the [DiCarlo-5i rianni ] Committee's 
investigation, I had no handle, no handle whatsoever on the 
subject matter of the contract or its performance with regard 
to MBM. We were without staff, without legal aid, and 
with [out] expertise of any kind at all." 

DiCarlo maintained that the DiCar lo-Sir ianni Committee was incapable of doing a 

thorough investigation of MBM, that the Di Car lo-Sirianni Committee was incapable 

of writing a report that could have threatened MBM, and that the thousands of 

dollars of cash that DiCarlo accepted from MBM constituted merely campaign 

contributions, willingly made oy a generous firm to an honest state senator. 180 

The Commission, however, received evidence inconsistent with DiCarlo's 
account. The evidence indicates that substantial information critical of MBM and 
of the MBM-UMass/Boston contract was available to DiCarlo, that the first draft 
of the DiCarlo-Sirianni Committee report was detrimental to MBM, and that the 
report was watered down as a result of MBM's agreement to give cash to DiCarlo. 
The information available to the DiCarlo-Sirianni Committee is considered in the 
present section, and the DiCarlo-Sirianni Committee's report is discussed in a 
later section . 

There were at least five sources that DiCarlo could have mined for 
information critical of MBM and of MBM's UMass/Boston contract. First, there 
were BBC employees such as James J. Cusack who were unhappy witn the general 
concept of an outside project manager for state projects and with the specific 
contract and performance involving MBM. Cusack had taKen his concerns to 
Representative Thomas Fallon in 1970, 181 had written memoranda to BBC Director 
Poitrast criticizing MBM's per f ormance , 182 anc j had discussed the failings of 
MBM and the MBM-UMass/Boston contract with Woodman, McDermott, and 
Sirianni.183 Criticisms expressed by Cusack might well have been taken 
seriously, since Cusack -- as the BBC's Project Engineer for the UMass/Boston 



180 Id. at 7, 10-12. 

181 See discussion of the Fallon Pill at the beginning of the present chapter 

182 See , e.g . , memorandum dated February 1, 19 71 from James J. Cusack to 
Walter J. Poitrast and others, enclosing a copy of MBM's UMass/Boston Status 
Report No. 16. See also Thomas testimony, 9 M/M 2/23/79 at 50-51. 

183 Sirianni testimony, 17 DiC 2/16/77 at 35; P. A. 3/1/578 at 88-94. 



164 

project -- was in a position to have first-hand knowledge of MBM's performance. 
Moreover, Cusack was widelv regarded as a skilled and knowledgeable BBC employee, 
having been recommended for the BBC Directorship by many individuals in the 
construction field and in government, including DiCarlo's mentor, Kevin 
Harrington . 1 84 

A second source o f presumably informed criticism was a disgruntled MBM 
employee named Stanley Davis. Davis had been hired as manager of MBM's New York 
office, 185 DU t Davis and MBM had decided upon a parting of ways. 186 when 
Davis learned of the DiCarlo-Siriann i investigation of MBM, Davis telephoned 
DiCarlo to arrange a meeting to assist in DiCarlo's investigation of MBM. 18? 
Davis met with DiCarlo in the State House early in May of 1971.188 According 
to Davis, DiCarlo took Davis to an attic-like area under the dome of the State 
House so that they could converse in privacy. 185 Davis says that he spent 
several hours discussing the MBM-UMass/3oston contract with DiCarlo, and that 
Davis left with DiCarlo a heavily annotated copy of the contract, replete with 
specific cr it icisms . 190 Moreover, Davis has testified that he had information 
which suggested that MBM may have been engaged in double-bi lling . 191 According 
to Davis, DiCarlo seemed sincerely intent on conducting a serious investigation 
of MBM and of overturning MBM's UMass/Boston contract. I 92 DiCarlo, in 
testimony before the Commission , 193 admitted that he had met with Davis out 



184 Letter dated June 11, 1969 from Kevin B. Harrington to A & F Commissioner 
Donald R. Dwight, recommending James J. CusacK for the position of BBC Director 

185 Davis testimony, Sp. Comm. 5/29/80 at 5. 

186 id. at 6. 

187 id. at 14. 

188 £d. 

189 id. at 14-15. 

190 Id. at 15. 

191 Id. at 6-7. 

192 Id. at 15. 

193 DiCarlo testimony. SDecial Commission 6/3/80 at 108. 



165 

said that he could not recall what transpired during his May 1971 meeting with 

Dav is : 

"I could not describe it and the only way that my memory tells 
me that I had a meeting with him, again, is a result of what I 
read the other day [in the newspaper] of his testimony here 
before this Commission." 

A third source of information was one of the members of the DiCarlo-Sir ianni 
Committee: Representative J. Laurence Golden. Golden had asked to De appointed 
to the committee because a friend who was in the construction field had urged 
Golden to applv for membership on the committee . l 9 ^ The friend, Walter 
Sullivan, had told Golden that MBM was engaging in unetnical practices with 
regard to awarding certain subcontracts on the UMass/Boston project. 1^5 
Sullivan provided Golden with specific criticisms which Golden snared with the 
DiCarlo-Sirianni Committeel 96 and with the press. I 97 

A fourth source was State Auditor Thaddeus Buczko. On March 23, 1971, Buczko 

had filed an audit report which criticized of MBM's UMass/Boston contract . - 1 - 98 

According to the analvsis of the contract by the State Auditor's office -- i99 

"[t]he Department of the State Auditor is concerned that 
the agreement between the Bureau of Building Construction and 
McKee, Berger and Mansueto , Inc. is an open end agreement that 
in addition to the fixed fee of 1.53% tne Bureau will be 
billed f or all salary expenses plus 20% and reimbursement at 
actual cost plus 5% for such subcontracts as McKee, Berger and 
Mansueto, Inc. may be required to enter into under Section N 
with no apparent financial limit on these additional costs. 
It is also not clear whether the required consultants and/or 
subcontractors under Section N would be hired without the 
prior approval of the Bureau of Building Construction. 



1 9 A Testimony of J. Laurence Golden, Special Commission, 5/29/80 at 4-6. 

195 16. at 4-8. 

196 Id. at 10-13. 

197 See Wendell H. woodman, "State House Report: Golden hours coming," 
Marlborough Enterprise - Sun, June 9, 1971; Thomas C. Gallagher, "Job Award unoer 
Fire," Boston Herald Traveler, June 15, 1971. 

198 Office of the State Auditor, Report on the Examination of the Accounts of 
the Bureau of Building Construction from July 1, 1969 to July 1, 1970, No. 71-S-2. 

199 Id. at 18-18a. 



166 



"The Department of the State Auditor also wishes to point 
out that the work assigned to McKee, Berger and Mansueto, Inc. 
is the type of work that the Bureau was created to perform. 
It would appear that the [staff of the] Bureau of Building 
Construction should have been increased to perform this work 
and to bring their regular work to a more current basis. The 
costs of such an expansion would be considerably less than the 
cost of the existing contract with this private corporation." 

Buczko appeared before the DiCar lo-Sirianni Committee on July 29, 1971 and 

reiterated his cr iticisms . 200 

A fifth possible source was UMass/Boston itself. The UMass/Boston planning 
and develooment director, Francis E. O'Brien, Jr., was concerned that the project 
not be sidetracked by any type of delay, 201 taut he was also critical of MBM ' s 
performance in certain respects. 202 

Not only were these sources of information not tapped fully, but the 
DiCar lo-Sirianni Committee rejected the suggestion of one of its members -- 
Golden -- that the very award of the contract to MBM be investigated . 203 Paul 
Menton has told Commission staff that Golden wanted to look into wny MBM was 
selected for the UMass/Boston project management contract, but that the other 
members of the DiCarlo-Si r ianni Committee said that the only proper guestion for 
their review was the alleged open-endedness of MBM's contract. 204 Golden 
testified that he agreed with the decision not to investigate how MBM won the 
contract and instead to look only at the legality of the terms of the contract, 
because it was pointed out to him that the terms of the oroer estaolishing the 
DiCa rlo-Si r ianni Committee permitted only such a narrow investiga t ion . 205 



200 Statement by State Auditor Tnaddeus Buczko at the July 29, 1971 public 
hearing of the DiCarlo-Si r ianni Committee, in House No. 5006, Report of the Joint 
Special Committee [ DiCar lo-Sirianni Committee] Relative to the Construction of 
the University of Massachusetts, Boston at Columbia Point, dated January 10, 1971 
[ sic ; should say 1972] at 15-17. 

201 O'Brien 5/15/79 interview at 5-7. See also discussion in Chapter IV 
supra . 

202 See discussion in Chapter VI supra . 

203 Golden testimony. Special Commission 5/29/80 at 12-16. 

204 Notes of 10/18/79 interview of Paul C. Menton by Special Commission staff, 
at 2. 

205 Golden testimony, Special Commission 5/29/80 at 12-16. 



167 

The terms of the order, 206 however, were quite broad, "authoriz [ ing ] and 

directt ing ] " the DiCarlo-Si r ianni Committee to 

"investigate and study all aspects of the contract ..., the 
necessity for such a contract, the total amount to be received 
by the consultant and contractor under the terms of said 
contract, the experience of such firm in handling this large a 
project, and other such matters relative thereto which the 
committee deems relevant and proper." 

The DiCar lo-Si rianni Committee's decision to have a narrowly-focused 
investigation apparently was not made until sometime after the committee had 
begun its hearings. 207 

Although the committee was meeting in executive session, 208 MBM was 
learning about what was going on through Peabody , who in turn was receiving 
information from such sources as Deputy A&F Commissioner Zabriskie, BBC official 
Kussman, Senator Kenneally, and Representative Menton, according to 
contemporaneous documents . 2 °9 Information was also being obtained by the Dowd 
firm. 210 

On the basis of the information from these sources, there appeared -- at 
least in Mav and June of 1971 -- to be reasons for MBM to be concerned about the 
DiCarlo-Si rianni Committee's work. For example, Peabody wrote notes, aated May 
18, 1971, which appear to reflect information that he obtained from ZaDriSKie 
about the DiCarlo-Sirianni Committee's May 18, 1971 meeting: 211 

"Quite a meeting. 

"Pointed questions -- Professional background] of Thomas + otners who signed 
the [contract]. 



206 House Order 5086. 

207 See news articles from June 1971 about Golden, cited above. 

208 DiCarlo-Sirianni Committee Report, at 8-9. 

209 See , e.g. , memorandum dated 5/18 [1971] headed "MBM, Zabriskie," 
handwritten by Endicott Peabody; memorandum undated [but probably 5/18/71] headed 
" Walter Poitrast and Kussman," handwritten by Endicott Peabody; letter dated May 
20, 1971 from Jeremiah D. Lambert to Gerald J. [sic] McKee , Jr. 

210 See , e.g. , Report on the Session of the Special Committee 
[DiCarlo-Sirianni Committee] Investigating U. Mass. Boston - held at Room 480, 
State House, May 18, 1971, identified by Roger Dowd as having been prepared by an 
employee of the Dowd agency; notes of A/23/80 interview of Roger Dowd oy Special 
Commission staff, at 3. 

211 Peabody 5/18 [1971] memorandum headed "MBM - Zabriskie." 



168 

"This firm [MBM] tried to go on board. Refiled 3 times 
of assets available. B[an]k[ rupltcy . what to sell. 



Questioned because 



"Sirianni loaded for bear...." 
The mention of "board" probably referred to MBM ' s three unsuccessful attempts in 
1969 -- right before winning the UMass/Boston job -- to "go public. "212 (The 
New York Stock Exchange is often referred to as "the Big Board.") 

The DiCarlo-Sirianni Committee held a public hearing on July 29, 1971.213 

Anticipating that the July 29, 1971 session would be the committee's last 

hearing, 214 Jeremiah Lambert wrote a memorandum on July 27, 1971 to 

Peabodv, 215 which said, in part, that 

"Jerrv [McKee] agrees that Phase II is critically important 
and wishes, of course, to avoid je[o ]p[a jrdizing its award to 
MBM through any adverse investigative committee findings or 
pronouncements. In this connection, he also suggested the 
possibility that a friendly committee member might be asked to 
comment individually as to MBM's performance or, what is the 
same thing, the BBC's wisdom in employing the project manager 
concept . This would tie in with the newspaper publicity 
envisaged, mentioned above." 

The last sentence guoted refers to previous discussion in the memorandum of MBM's 

attempts to obtain favorable newspaper coverage. 

In what mav have been an attempt to avoid another unfavoraDle newspaper 

article, Endicott Peabodv met on July 28, 1971 with Wendell Woodman216 __ W hose 

articles in February 1971 had led to the DiCarlo-Sirianni Committee. PeaDody's 

friend Edward Carroll set up the meeting2-i- 1 and was also present, ^18 Du ^ 



212 See discussion in Chapter II supra . 

213 DiCarlo-Sirianni Committee Report, at 9. 

214 See letter dated July 27, 1971 from Jeremiah D. Lambert to Gerald J. [ sic ] 
McKee, Jr. 

215 Memorandum dated July 27, 1971 from J.D.L. [Jeremiah D. Lambert] to E.P. 
[Endicott Peabody]. 

216 Peabody daily office record, 7/28/71; Peabody law firm MBM tub card 25, 
entry for 7/28/71. 

217 Notes of 2/25/80 interview of Edward C. Carroll by Special Commission 
staff, at 1. 

218 Id. 



169 

Carroll says that he walked away from the table when Peabody and Woodman began 

talking. 219 According to Woodman, Peabody and Dowd had been engaging in a 

counter-offensive in reaction to Woodman's articles. 220 woodman claims that 

their efforts caused Woodman to have his column cancelled in dozens of newspapers 

around the state. 221 Notwithstanding the July 28, 1971 meeting between Peabody 

and Woodman, Woodman syndicated another article that was unfavorable for MBM on 

Julv 30, 1971.222 

There appears to be no official transcript of the July 29, 1971 

DiCarlo-Sirianni Committee public hearing. However, the Peabody firm prepared a 

memorandum for files, dated July 30, 1971, which appears to be a partial 

quasi-transcript . 223 Both that document and Woodman's July 30, 1971 article 

about the session indicate that Auditor Buczko remained critical of MBM's 

UMass/Boston contract. 224 p or example, according to Woodman's article -- 

"Buczko was the most critical of the contract. He called 
it 'dangerous,' and accused the BBC of 'abrogating its powers 
and responsibilities.'" 

The Peabody firm document225 showed Buczko as recommending that the state 

"tmjake sure that the people entrusted with the responsibility 

are well versed in the field. Must safeguard to insure the 
taxpayers' rights are protected." 

The Peabody firm document then commented: "This was a direct slam at MBM." 



219 id. 

220 Woodman 10/11/79 interview. 

221 1A- See "List of newspapers ... that cancelled their subscri pti on [s ] [to 
New England News Service] after February 1971," Woodman Research Dossier on MBM 
UMass Contract. 

222 "State Auditor blasts management contract," New England News Service 
release, Julv 30, 1971. 

223 Memorandum for files dated Julv 30, 1971, on the letterhead of Peaboay law 
firm. 

224 "State Auditor blasts management contract," at 1. 

225 Peabody law firm 7/30/71 memorandum for files. 



170 

The Peabody firm document reflected Rep. Sirianni criticizing the contract, 

although not MBM's performance : 226 

" Sirianni : What are we going to do with the contract we 
have? We are paying possibly two times on a flat rate plus 
5%. I think the contract should be terminated. I don't have 
reason to say we don't have competent work. Evidently, the 
MBM performance is of a very high nature." 

Woodman's article also reported that 

"Rep. Sirianni termed the contract 'siopDy' and 'ridiculous' 
and suggested that it be terminated and renegotiated ...." 

The Woodman article made no mention of DiCarlo's attitude, and the Peabody 

firm document recorded DiCarlo comments which are somewhat difficult to 

categorize as favorable or unfavorable toward MBM. 227 j ne document does 

indicate that BBC official Kussman and A&F Commissioner Charles Shepard spoke in 

favor of the contract. 228 \^ c ^ ee also defended the contract. 229 



The First Draft 

of the DiCarlo-Sirianni 

Committee Report 

MBM was very concerned, over the next several months, about what the 
DiCarlo-Sirianni Committee's final report would say. It channeled some of this 
concern into early attempts to inspire favorable language from the committee. 

Bv July 30, 1971 -- the dav after the public hearing -- MBM had assisted 
Frederick Kussman o " the BBC in preparing a draft230 f a letter that Kussman 
would send to the committee giving s further defense of the contract. By August 
2, 1971, work was well underway on a brief that MBM would suomit to the Committee, 
and on August 6, 1971 Jeremiah Lambert sent the completed draft of the brief to 



231 



226 Id. 

Some o f the statements may have been a result of DiCarlo's simply 
repeating what a previous witness had said before DiCarlo asKed his own question 

228 Peabody law firm 7/30/71 memorandum for files. 

229 Id. 

230 Memorandum dated July 30, 1971 from Jack S. Thomas to "Chub" [Endicott 
Peabodv], and attachment, 8 Dage draft letter concerning contract 601, project 
U67-£#2A, signed by Frederick Kussman. 

231 Outl-ne of brief on MBM, dated August 2, 1971. 



171 

McKee for his review. 252 Lambert enclosed, along with the draft brief, a copy 

of s. 75 __ the bill that Senator Kelly had introduced in October 1970 to permit 

the BBC to appoint temporary consultants to expedite projects. 255 The bill was 

still pending in Kelly's Senate Ways & Means Committee, and Lambert wrote to 

McKee 25A that 

"We believe this legislation is very important to MBM since it 
would appear to provide some real protection against a 
recurrence of the present investigative assault. We think tne 
legislation should be pushed." 

Lambert's comment coincided with Peabody's view, expressed in a handwritten 

note, 235 that 

"We should get on top of this bill + not just leave it to 
chance . " 

In a letter dated August 12, 1971, BBC official Frederick Kussman urged Senate 

President Harrington to push for passage of S. 75. 25 ^ Under a cover letter 

dated August 14, 1971, Endicott Peabody sent to Peabody's friend Edward Carroll a 

copy of Kussman's letter to Harrington about S. 75. Peabody wrote to 

Carroll : 237 

"I enclose a copy of a letter from Fred Kussman on Senate Bill 
75 concerning which we talked on the telephone. Hope 
something can be done with it. 

"I also enclose a copv of the brief which we filed with 
all members of the Committee on August 12. It is in very 
simple outline form, and can be helpful in the writing of the 
majority report. I much appreciate your interest." 

Carroll has testified that he has no memory of doing anything specific with the 



232 Letter dated August 6, 1971, from Jeremiah D. Lambert to Gerald [J.] 
MuKee , Jr. 

233 See discussion of the Kelly bill in Appendix C. 

234 Lambert 8/6/71 letter to McKee. 

235 Memorandum, undated [but probably from August 6-10, 1971], handwritten by 
Endicott Peabody in his spiral steno pad. 

236 Letter dated August 12, 1971 from Frederick J. Kussman to Senate President 
Kevin B. Harrington, advocating the passage of S. 75. 

237 Letter dated August 14, 1971 from Endicott Peabody to Edward Carroll. 



172 
contents of that mailing, 2 38 and Carroll has told Commission staff 259 that he 
has no idea what Peabody meant when Peabody wrote "Hope something can De done 
with it;" "the brief ... can be helpful in the writing of the majority report;" 
and "I much appreciate your interest." 

At the same time that BBC official Kussman -- with assistance from MBM -- was 
writing the letter under Kussman's own name to the DiCarlo-Si rianni Committee 
defending the contract that Kussman and Poitrast had negotiated with MBM, and at 
the same time that Kussman was writing a letter under his own name to Senate 
President Harrington about 5. 75 and making a copy of that letter available to 
MBM and/or MBM ' s attorney Peabody, Kussman was agreeing to perform another role 
-- that of secretly drafting the final report for the DiCarlo-Sir ianni Committee, 
the report which would assess the contract that Kussman and BBC Director Poitrast 
had negotiated with MBM. This information comes from testimony of Kussman, as 
well as from testimony of DiCarlo and William Masiello. 

T he testimony is that DiCarlo mentioned to his friend Masiello that DiCarlo 
was uncertain how to write a final report on MBM ' s contract and what to write in 
such a report 2 ^ -- and tnat Kussman mentioned to his friend Masiello that 
Kussman was concerned about DiCarlo embarrassing himself and the BBC by writing 
an insu f f icient 1 v knowledgeable and informed report 2 ^ -- and that Masiello 
then solved everyone's problem by arranging for Kussman to write the report 
secretly for DiCarlo. 2 ^ 2 In Masiello's view, the "everyone" included MBM, 
since Masiello has said that he told MBM Vice President Mansueto in mid-August 
1971 that Masiello had arranged for Kussman to write the DiCarlo-Sir ianni 
Committee report, and that Masiello asked MBM to show its gratitude by 



2 38 Testimony of Edward [C] Car[r]ol[l], P. A. A/10/78 at 10-12, 17. 

239 Carroll 2/25/80 interview at 1-3. 

240 William Masiello testimony, Special Commission 6/24/80 at 43-44; DiCarlo 
testimony, SDecial Commission 6/3/80 at 111-112, 120. 

241 Kussman testimony, 20 DiC 2/2/77. 

242 William Masiello testimony, Special Commission 6/24/80 at 43-44. 



173 
giving Masiello some money for his assistance . 2 ^3 

Kussman has testified that he did not draft the DiCarlo-Sirianni Committee 
report during hours when Kussman was supposed to be working for the BBC. 
Instead, Kussman says that he wrote the report during his vacation, which 
occurred between mid-August 1971 and early September of 1971.244 

When the FBI and United States Attorney's Office were preparing for the 
DiCar lo-MacKenz ie trial in 1975 and 1976, they asked Kussman for any documents 
that he had that related to the case. 2A5 He did not at that time give to tnem, 
or tell them about, a copy that he had retained of the draft report that he had 
prepared for the DiCarlo-Sirianni Committee. 2 ^ 6 When Kussman appeared as a 
defense witness at the DiCar lo-MacKenzie trial and produced the copy of tne draft 
report, the Assistant United States Attorney prosecuting the case indicated that 
he was upset that Kussman had not made the draft available previously to the 
Government . 2 4 7 Since the Government had already rested its case before the 
draft became available and with the Government apparently not having been told 
that there had been such a draft, 2Zt8 there was little emphasis upon the 
contents o f the Kussman draft during the DiCarlo-MacKenz ie trial. 2 ^" There is 
reason to believe that the document in question is in fact a copy of the original 
draft o f the DiCarlo-Sirianni Committee report because, in addition to Kussman's 
testimony vouching that it is a copy of the original draft, there is 



243 id. at 44-45. 

244 Kussman testimony, 20 DiC 2/22/77 at 139-140. 

245 Id. at 148-149. 

246 J_d. at 149. 

247 Bench conference, 20 DiC 2/22/77 at 52-55, 62-63. 

248 See bench conference, 20 DiC 2/22/77 at 54. 

249 See Kussman testimony, 20 DiC 2/22/77 at 135-149, 



174 

testimony by MBM salesman Martin Heyman250 that there was an early draft of tne 

DiCarlo-Sirianni Committee report along the lines of the document in question. 

This first draft of the DiCarlo-Sirianni Committee report by BBC official 

Kussman absolved the BBC of any wrongdoing in deciding to use an outside project 

management firm for UMass/Boston and in negotiating the contract with MBM. 25i 

But, although the draft found nothing to criticize with the BBC's behavior, it 

reached other conclusions that were highly detrimental to MBM. In particular, 

although it concluded that while the use of an outside project management firm 

mav have been acceptable for the initial stages of Phase I of the UMass/Boston 

contract, it said that the proper policy for the rest of Pnase I, for all of 

Phase II, and for all future state projects (with rare exceptions) would be to 

have project management functions performed exclusively by the BBC. The language 

on th^'s point in the first draft of the DiCarlo-Sirianni Committee report (as 

prepared by Kussman) included the following : 252 

"We can find no previous history of an agency of tne 
Commonwealth entering into a project management service 
contract for a Drdject of the size of Columbia Point. That 
the Bureau made an apparent sound decision to employ experts 
to meet the construction timetable does not and should not be 
considered as a precedent for their continued use on this or 
any other project except in the most extenuating 
circumstances. The personnel growth of the Bureau has 
obviously not Kept pace with the expanding capital outlay 
Drogram of the Commonwealth. The expertise appears to De 
available at the Bureau of Building Construction to nandle all 
save the most ambitious crash construction programs which are 
the exception and not the rule. The need to supplement the 
Bureau of Building Construction staff wnich was present in 
August of 1969 does not justify the continuation of consultant 
services beyond the present contract termination date of 
December 31, 1972. 



"If section 8 of Chapter 898 of the Acts of 1969 is determined 
to be so restrictive as to prohibit the hiring of temporary 
employees from the ranks of our vast unemployed this committee 
strongly recommends the establishment of excess quota 03 
positions so as to prepare now to have an orderly transition 
in December of 1972, from project management services to state 
employees services, under the direction of the unit employees 



250 Heyman testimony, P. A. 3/6/78 at 56-60; P. A. 3/22/78 at 164-167, 169. 

251 Typescript draft, Report of the Special Joint Committee to Investigate and 
Study a Consultant Service Contract, University of Massachusetts, Columbia Point 
Boston [Kussman draft], Defendant's Exhibit 55 at the DiCarlo-McKenz ie trial and 
Introductory Exhibit 10, Special Commission 5/28/80 at 20. 

252 Id. at 6, 8. 



175 

currently assigned from the Bureau of Building Construction 
home office to this project." 

This draft was extremely unfavorable for MBM because, although no wrong-doing was 

cited, the Commonwealth was (in the draft) rejecting the very concept of the use 

of outside firms such as MBM to perform project management on state projects. 

Moreover, this draft would pose imminent financial harm to MBM since MBM was 

shortly to apply 25;5 for extensions of its UMass/Boston Phase I project 

management contract -- extensions worth more than $1 million to MBM 2 5A __ anc j 

since MBM was also about to apply255 f or a contract for Phase II of the 

UMass/Boston project, which MBM regarded as potentially more lucrative even than 

MBM's Phase I contract. 



253 Letter dated December 29, 1971 from Gerald McKee, Jr. to Walter J. 
Poitrast, submitting a proposal for furnishing construction management services 
for Phase II of the UMass/Boston project. 

254 See chart, "MBM Contracts for Project Management Services at UMass/Boston," 
introductory Exhibit 7, Sp. Comm. 5/28/80. 

255 Letter dated December 29, 1971 from Gerald McKee, Jr. to Walter J. 
Poitrast, requesting an extension of MBM's project management services beyond the 
present contract termination date of December 31, 1972. 



176 



The Intercession of 
Senator Ronald C. Mackenzie 
and the Changing of the 
DiCarlo-Sirianni Committee Report 

During the hiatus between the conclusion of the DiCarlo-Sirianni Committee 

hearings (on July 29, 1971) and the completion by Frederick Kussman of the first 

draft of the DiCarlo-Sirianni Committee report (on September 6, 1971, according 

to Kussman), c MBM was in the process of acauiring its old competitor, Mauchly 

Construction Management, Inc. ("MCM"). 257 On August 30, 1971 MBM President 

McKee wrote to Endicott Peabody about the planned acquisition of MCM and about 

McKee's continuing concerns regarding the DiCarlo-Sirianni Committee: 

"Dear Chub: 

"Much to my dismay, a state of peaceful auiet has not yet 
been reached in Boston on the Columbia Point project. Jack 
Thomas tells me that television crews were at the site last 
Thursday ano that commentary, including an interview with 
Joseph DiCarlo, was featureo on the 6:00 news. Apparently 
having exhausted the mileage in the absurc assertion that the 
contract was entirely profit, the forces of antagonism are now 
clamoring about the alleged impropriety. This suggests 
several things, all unpleasant: 



"1. That the committee report may question the legality of 
the contract and/or request a review of it by the 
attorney general or others. 

"2. That the forces motivating the recent problems with the 
press and with DiCarlo's committee are still operative. 

"3. That Senator DiCarlo still believes there is some 
advantage in a posture of criticism of us and our 
contract . 

"Thomas has asked Roger Dowd [John C. Dowd ' s son] tc see 
if he can find out why this snake -- though apparently 
scotched -- will not die. 

"We have agreed to acquire Mauchly Construction 
Management Company who, as you know, have been building a 
reputation and obtaining work in Boston under the sponsorship 
primarily of Senator Mac[K]enzie. Daniel Shields, the 
president of Mauchly, on Tuesday and Wednesday of last week 
met with Dwight , Zabriskie, Poitrast, and ( mirabile dictu ) 



256 Kussman testimony, 20 DiC 2/22/77 at 39. 

257 See discussion in Chapter II supra . 

25£ Letter dated August 30, 1971 from Gerald McKee, Jr. tc Endicott Peabody 



177 

Senator DiCarlo. The Dwight and DiCarlo meetings were also 
attended by Senator Mac[K]enzie. The state representatives 
were very pleased with the prospective acau[i jsition and I 
believe we should meet at an early date to discuss how the 
joint operation might obtain work, particularly project 
management or other services, at the Worcester Medical 
Center. ..." 

McKee met with MacKenzie -- along with Shields and Thomas -- on September 10, 

1971 in Boston, according to a contemporaneous calendar of Jack Thomas's 

260 



Thomas then sent a letter, dated September 15, 1971, to MacKenzie 
letter said, in part: 

"Pursuant to our conversation last week, I am enclosing a 
copy of the statement issued to the Investigating Committee 
by Mr. Buczko, together with drafts of two (2) proposed 
responses which we have never issued. There is nc plan at 
the present time to react openly to all of the 
misstatements contained in Mr. Euczko's report. 



259 

The 



"My scheduled luncheon with a representative of the MBTA 
was postponed. However, I expect it to be rescheduled in 
the next few days, and I will keep you informed of 
developments in this regard." 

The letter indicates that MBM intended to continue MCM's practice of utilizing 

261 
MacKenzie to provide assistance in obtaining public contracts. MCM had been 

paying finder's fees when outside assistance resulted in contracts being 

won." The letter also suggests that MacKenzie was being made more familiar 

with MBM's position concerning the DiCarlo-Sirianni Committee investigation. 

(MacKenzie, of course, was not a member of the DiCarlo-Sirianni Committee.) 

In the meantime, MBM was still relying upon Endicott Peabody in regard to the 

DiCarlo-Sirianni Committee. On September 20, 1971 Peabody sent a letter to his 

partner Lambert, with a copy to MBM Vice President Jack Thomas, reporting on work 

that Peabody had done for MBM in Boston on September 16 and 17, 1971 

Feabody's letter said, in part: 



263 



259 Thomas desk calendar, at 9/10/71. 

260 Letter dated September 15, 1971 from Jack S. Thomas to Ronald C. MacKenzie, 

261 See discussion in Chapter IV supra and in Chapter X infra . 

262 Harding testimony, Sp. Comm. 6/4/80 at 10-18; see Chapter X infra . 

263 Memorandum oated September 20, 1971 from Endicott Peabody to Mr. [Jeremiah 
Lambert ] . 



176 

"I talked to Paul Menton [a member of the DiCarlo-Sirianni 
Committee] who states that the report will not be written 
until after prorogation October 15, but that one must be 
written before December 1st. He believes that it will discuss 
the Project Management contract as a new type of contract. 
Since this is so, and there has been no action for a year or 
two, the procedures should be reviewed before issuing another, 
based on our experience. 

"He also felt that the University of Massachusetts might 
be interested in this report and we should activate them some 
way . 

"He said Sirianni and Golden might give us some trouble 
in the report but only on the minority side. He stated that 
if the majority report indicated it was an open-ended 
contract, he would write a strong dissent. Senator Kenneally 
told Ed Carroll the same. 

"It may be difficult for Senator DiCarlo to write a 
report passing around the compliments because he is very 
sensitive to Woodman's columns in his District." 

Peabody sent a somewhat similar, but less detailed, letter directly to McKee 

about a week later. 

In late September or early October of 1971, perhaps shortly after receiving 

the letter from Peabody, McKee decided that MEM should turn to MacKenzie to see 

if he could learn more about the report that the DiCarlo-Sirianni Committee would 

be issuing. McKee asked MCM Vice President William Harding to speak to 

26 6 26 7 

MacKenzie about the report. Harding did so, ano MacKenzie soon 

reported back that he had read the draft report in DiCarlo's office and did not 

2 f P 
find "anything greatly harmful" to MEM. cc McKee then asked Harding to see if 

MacKenzie could borrow the draft report from DiCarlo so that MEM could look it 

269 

over before it was issued. McKee kept the Peabody firm apprised of at least 



26A Letter dated September 27, 1971 fron- Endicott Peabody to Gerald McKee, Jr 

265 McKee testimony, 4 DiC 1/27/77 at 60-61. 

266 id. at 73-74. 

267 Id. at 74; Harding testimony, Sp. Comm. 6/4/80 at 36. 

268 MacKenzie testimony, Sp. Comm. 5/28/80 at 22. 

269 Harding testimony, Sp. Comm. 6/4/80 at 36 



179 
some of these developments, as indicated in a memorandum dated October A, 1971 



from Jeremiah Lambert to Endicott Peabody 



270 



The memorandum said 



Lambert 



"In a telephone conversation today Jerry McKee mentioned 
that it now appears that the committee report will be 
submitted to MBM in draft for final editing prior to its 
issuance. This report comes through Mauchly's political 
friend in Massachusetts and is somewhat different from the 
information you received from K[e jnneal [1 ]y . 

"In view of this, it will probably be best not to spend 
time preparing a draft report. If you want to inouire 
further, you might do well to talk to Jack Thomas, although 
the best posture for the moment could instead be to do 
nothing until further notice." 

Feabody's concern at this news was expressed in a handwritten note to 
271 



"I sense a desire by the Mauchly group to move in and 
supplant us in dealing with the Commonwealth. I'm not 
persuaoed this is for the good of the client. Maybe we 
should confer rather than let McKee evaluate the info he 
receives + make the decisions which could well be mistaken 
on this basis." 



Lambert wrote another memorandum to Peabody dated October 8, 1971 



272 



"I spoke to Jerry McKee today. He believes that the 
[D]iCarlo committee report will be out soon and that MBM 
may have a chance to review it in draft. This information 
comes through M[a]cKenzie. 

"Meanwhile, Jerry wants to know whether you have heard 
anything else from K[e ]nneal [ 1 ]y . He will call you shortly 
to bring you up to date." 

The first MEM $5,000 check whose proceeds allegedly went in cash to MecKenzie 

273 



(to split with DiCarlc) bore the date October 8, 1971 

contains the entry 



Anthony Mansueto's 



pocket calendar for October 8, 1971' 

•-GM - RE MASS = WRONG." 
Daniel Shields of MBM has recalled Mansueto as being upset about Gerald McKee's 



270 Memorandum dated October 4, 1971, from "J.D.L." [Jeremiah D. Lambert] to 
"E.P." [Endicott Peabody]. 

271 Handwritten note by Endicott Peabody on Lambert 10M/71 memorandum to 
Peabody . 

272 Memorandum dated October 8, 1971, from "J.D.L." [Jeremiah D. Lambert] tc 
"Chub" [Endicott Peabody]. 

273 y.BM-Eoston check #2699 dated October 8, 1971 for $5,000 payable tc cash. 

274 Mansueto pocket diary, 10/8/71. 



180 
27 5 

decision tc pay Mackenzie and DiCarlo. It is possible that Mansueto's 
October 8, 1971 entry reflects that concern, although there is testimony that the 



decision to pay DiCarlo and Mackenzie was net made until later 



276 



277 
In a handwritten note to Lambert dated October 10, 1971, Peabody wrote 

"I spoke to Thomas on Friday. He had heard some -- I'm 
from Missouri. Do you want M[a]cKenzie supplanting us? 

"However, I did nothing on the memo for Kenneally -- 
which I think we should do -- at least in part. 

"I think there is a need for someone in Boston to be 
watching out daily for MBM's interests and to keep in touch 
with me -- on legislation, on reports, etc...." 



On October 13, 1971 Mackenzie borrowed the DiCarlo-Sirianni Committee draft 

2 78 

report from DiCarlo. It is unclear whether MBM had seen a previous draft of 
the report. In interviews with the Commission, William Masiello said that he was 

not sure about it, but that he may have given a copy of the Kussman draft tc 

279 

Mansueto in August or September of 1971. Martin Heyman of MBM testified tc 

the Post Audit Subcommittee that he recalled seeing an early, unfavorable draft 
on Jack Thomas's desk at MBM. 260 

In any event, Mackenzie took the report early on the morning of October 16, 
1571 to the Sheraton Boston hotel, where McKee, Shields, and Harding were 
waiting. •*• McKee reviewed the draft and prepared several pages of suggested 



275 Shields 2/24/80 interview at 4. 

276 See discussion below. 

277 Memorandum dated October 10, 1971 from "Chub" [Endicott Peabody] tc 
"Jerry" [Jeremiah D. Lambert]. 

278 Mackenzie testimony, Sp. Comm. 5/28/8C at 24. DiCarlo testimony, So. Comm 
4/7/80 at 17. 

^79 William Masiello interview with Commission staff. 

280 Heyman testimony, P. A. 3/22/78 at 164-166. 

281 Mackenzie testimony, Sp. Comm. 5/28/80 at 24-27; Shields testimony, Sp. 
Comm. 6/2/80 at 29-30; Hardinc testimony, Sp. Comm. 6/4/80 at 36-37; cf. Thomas 
testimony, 11 DiC 2/8/77 at 37-41. 



181 



282 



chances and additions, which MacKenzie was then asked to submit to DiCarlo 

According to MacKenzie and Harding, there was a discussion between them on 
October 14, 1971 — after MacKenzie was handed the suggested changes -- about 
MEM's giving substantial "political contributions" to DiCarlo and MacKenzie in 
connection with having those changes made in the DiCarlo-Sirianni Committee 
report. Harding has testified that MacKenzie brought up the subject and that the 

2P 3 

amount mentioned was $40,000. MacKenzie has testified that Harding made the 
overture and talked in terms of $20,000. There is also, as discussed above, 
evidence suggesting that some sort of agreement, at least a preliminary 
agreement, may have been made as early as October 4 or October 8, 1971. 

In any event, Harding and MacKenzie have both testified that MacKenzie said 
he would tell DiCarlo about MBM's willingness to make the "contributions" and 
that MacKenzie would find out whether DiCarlo would make the changes that MEM 



souoht 



285 



MacKenzie and DiCarlo, in turn, have both testified that when 



MacKenzie showed the suggested changes to DiCarlo, DiCarlo felt that McKee had 



286 



gone too far in asking for overly laudatory language about MEM 

287 

testified as follows about what next happened: 

"I did mention the fact to Senator DiCarlo [that] if it 
could be worked out and any of these things might be 
acceptable[ , ] MEM was willing to give us some considerable 
cont ributionf s ] over the years. ... 

"Senator DiCarlo asked me what [ ' ]considerable[ ' ] was and I 
repeated what Harding said, that should be at least $20,000 
in contributions. 



MacKenzie 



282 MacKenzie testimony, Sp. Comm. 5/28/80 at 25-26. 

283 Harding testimony, Sp. Comm. 6/4/80 at 39. 

284 MacKenzie testimony, Sp. Comm. 5/26/80 at 27-28. 

285 Hardinq testimony, Sp. Comm. 6/4/80 at 39-41; MacKenzie testimony, Sp 
Comm. 5/28/80 at 27-29. 

286 MacKenzie testimony, Sp. Comm. 5/28/80 at 29; DiCarlo testimony, Sp. 
Comm. 4/7/80 at 11-12, 30-31. 

287 MacKenzie testimony, Sp. Comm. 5/28/80 at 30. 



182 

"Senator DiCarlo at the same time... said that any 
contributions that were received, he said it would be split 
fifty-fifty and he also said that hopefully I hope they 
understood it would be better to make them in cash." 

MacKenzie reported back to Harding that the changes that McKee had proposed 



were too self-servinc and that McKee would have to tone them down 



288 



op q 

Subsequent changes proposed by MBM were accepted by DiCarlo. Jack Thomas of 
MBM has testified that the second set of proposed changes (the set that DiCarlo 

accepted) was given to Harding later on the same day, October 14, 1971, for 

290 
delivery to MacKenzie. 

Endicott Peabody has testified that MBM officials did not inform him of their 

decision to pay DiCarlo and MacKenzie for changes in the DiCarlo-Sirianni 

OQ I 

Committee report. x Peabody wrote a letter to McKee dated October 18, 

1971 252 which said, in part: 

"Following your telephone call last Friday [October 15, 1971], 
I was in touch with several parties in Massachusetts with 
respect to the proposed BBC budget which might eliminate 
consideration of a Project Manager for Phase II, and possibly 
for the balance of Phase I. 



" . . . [R ]ecardless of what has been reouested in the budget, the 
BBC will be perfectly free to hire a Project Manager for Phase 
II (with termination rights of course) as soon as it is 
necessary to do so. I had assurance from the Commissioner's 
Office which supervises the EEC on this point. 

"What will be of great importance is the final report of the 
DiCarlo Committee. If the report recommends the termination 
of the Project Manager contract, the EEC might feel pressured 
to follow its recommendations. This is a marked switch from 
its earlier position when it insisted on its executive 
prerogatives. Accordingly, every effort should be made to 
insure that the report is favorable with regard to the 
continuation of a Project Manager contract at Columbia Point. 

"In this area, I must voice my concern. As Counsel, we have 
been responsible for the legislative investigation and have 
been willing to exercise this responsibility. On your own 
initiative, while cousulting us after the fact, you have 



288 



Id. 



239 j_d. at 31-32; DiCarlo testimony, Sp. Comm. 5/7/80 at 12, 30-31. 

290 Thomas testimony, 11 DiC 2/8/77 at 41-43, 47-43. 

291 Peabody testimony, Sp. Comm. 6/19/80 at 220-222. 

292 Letter dated October 18, 1971 from Endicott Peabody to Gerald McKee, Jr., 
concerning MBM's new assistance in regard to the investigation of the 
DiCarlo-Siriani Comittee. 



183 



brought new assistance into this area. We do not say it won't 
be effective; we do feel, however, that since the over-all 
direction of this matter appears to have been taken out of our 
hands, we cannot control events and results. An adverse 
result would distress us as much as it would distress you, in 
view of our time and commitment in this matter. 

"I am going to be in Boston at the end of this week, and 
will be in consultation with you and Jack Thomas at that time." 

Peabody came to Boston on October 22, 1971 and wrote the following report about 

79 "5 

his activities: 

"I met with Senator Kenneally and he practically 
assured me that the final report of the Committee would not 
contain any recommendation suggesting that the BBC take 
over the project management of Columbia Point, either for 
the remainder of Phase I or Phase II. Indeed, an effort is 
being made to obtain a positive recommendation. 

"Ed Carroll informed me that he is sure that Senator 
DiCarlo will write a helpful report. From his prior and 
present relationship with Senator DiCarlo, we have a good 
basis for reliance on this statement. 

"Jack Thomas accompanied me to the State House during 
which time I also talked to the Speaker and the Whip. 

"Time is now of the essence since it would be 
desirable to execute Phase II as soon as the Legislature 
prorogues which is anticipated not later than November 15. 

"Attached is a clipping picked up by Jack Thomas, 
which suggests that DiCarlo is going our way." 

294 
The attachment was a news article, which said, in part: 

"The bill to increase the funding authorization for the 
[Middlesex County] courthouse to some $44.5 million is now in 
the Joint Rules Committee. It will not get out, says Rules 
Vice Chairman Sen. Joseph DiCarlo, D-Revere, without a 
provision for a consultant on the site to supervise the rest 
of the construction. 

"DiCarlo pointed to the University of Massachusetts 
Columbia Point construction project as a prime example of cost 
savings by use of a consultant...." 

The news article noted, however, that -- 

"The contract with McKee-Mansueto [ sic ] for consultant 
management services at UMass is, according to the state 
auditor's office an example of nearly everything a 
consultant's contract should not be. 

"In fact, the contract came under such heavy criticism 
that it is now the subject of a legislative 
investigation . . . . " 

The article did not mention that the chairman of the committee investigating 

MBM ' s contract was DiCarlo. 



29 3 

Memorandum dated October 26, 1972 from Gov. [Endicott] Peabody to Mr. Jeremiah D. Lamber 

"Re: MBM - visit to State House in Boston, Friday, Oct. 22." 



294 



Shelly Cohen, "Do Consultants Save Money," otherwise unidentified newspaper article, 



184 



As discussed in Appendix D to the present Final Report, there is testimony 
that DiCarlo's advocacy of project management in general -- and of MBM in 
particular — fcr the Middlesex County Courthouse was related to MBM's 

undertaking to make cash "contributions" to DiCarlo. That testimony has 

29 6 
been denied by DiCarlo and McKee. 

As to the reference in Peabody's memorandum to Edward Carroll's "prior and 

present relationship with Senator DiCarlo," a memorandum dated October 31, 1971 

007 

by Peabody^ says: 

"Ed Carroll is hiring Senator DiCarlo's brother as a 
Court Officer on the Boston Juvenile Court beginning 
Wednesday, November 3. 

"He believes that the final report will be issued 
following proro[gu]e and will be favorable...." 

The DiCarlo-Sirianni Committee's final report was filed on November 10, 

95 P 

1971. The language that would have barred MBM from obtaining extension 

29° 
contracts on Phase I of UMass/Boston was deleted. MBM subsequently did 

obtain such contracts, pursuant to which MBM received more than $1,000,000 in 

fees.'' The language that would have barred MBM from obtaining a Phase II 

project management contract was also eliminated. MBM's continued pursuit of 

Phase II is discussed in Chapter V of the present Final Report. 



295 Shields testimony, Sp. Comm. 6/2/8C at 78-85. See also discussion of 
MBM's attempts to win a project management contract for the Middlesex County 
Courthouse in Appendix D to this Final Report on MBM. 

2$£ DiCarlo testimony, Sp. Comm. 6/3/80 at 98-102; McKee 11/20/79 interview. 

297 Memorandum dated October 31, 1971 from Gov. [Endicott] Peabody to Mr. 
[Jeremiah D.] Lambert, "Subject: MEM." 

29£ Testimony of House of Representatives Clerk Wallace C. Mills, 20 DiC 
2/22/77 at 180. 

295 Typescript Report of the Special Joint Committee [DiCarlo-Sirianni 
Committee] to Investigate and Study a Consultant Service Contract, University of 
Massachusetts, Columbia Point, Boston, November [10], 1971, at 42, 50. 

300 See chart entitled "MBM Contracts for Project Management Services at 
UMass/Boston, " introduced as Exhibit 7, Sp. Comm. 5/28/80. 

301 Typescript 11/[10]/71 DiCarlo-Sirianni Committee Report, at 42, 50. 



185 

The new language submitted by MBM to DiCarlo (through MacKenzie) was included in 

the report. 302 

MEM had advance notice that the DiCarlo-Sirianni Committee's final report 

would be favorable. Jack Thomas obtained a copy of the "Recommendations" and 

"Conclusions" sections that would be included, and he sent copies to McKee and 

Feabody with the notations: "Rec'd from Ed Carroll 11/5/71;" "Looks like this 

will be it.!!:" 303 Thomas then prepared a draft, dated November 9, 1971 -- the 

day before the DiCarlo-Sirianni Committee report was filed -- of a proposed 

letter to clients, guoting favorable language from the DiCarlo-Sirianni Committee 

report. 3 Thomas sent a copy to Peabody, who wrote to Lambert: 

"Jerry - Let's talk - We did a job for them + Carroll did too! 
- Chub." 

Peabody ' s partner Lambert wrote a memorandum dated November 16, 1971 to McKee 
306 



and Thomas 



"Ed Carroll called yesterday. He confirmed that the final 
legislative committee report on the U/Mass consulting 
contract with MEM has now been issued and that it is 
favorable. He will send us a complete copy of the report 
shortly . 

"Ed indicated that Wendell Woodman will probably write one 
last article on the matter before it is finally dropped. 

"Ed expressed considerable optimism about (a) MEM's chances 
of getting Phase II on a consulting basis and (b) recovery 
of its claim. He suggested that Phase II would probably be 
awarded around the first of the year. The claim could then 
be pressed. He thought it could be submitted separately 
and need not become part of the Phase II price negotiations 

"The legislation which would have authorized EEC to add to 
its inhouse staff to meet Phase II reguirements has been 
scuttled in committee, according to Carroll." 



302 Typescript 11/[10]/71 DiCarlo-Sirianni Committee Report, at 51-52. 

303 Typescript document headed "Recommmendat ions , " with the notation, "Rec'd 
from Ed Carroll 11/5/71. JST [presumably Jack S. Thomas]." 

304 See memorandum dated November 18, 1971 from Jack S. Thomas to Gerald 
McKee, Jr., with copies to Endicott Peabody and Roger Dowd. 

305 Handwritten notation by Endicott Peabody on Thomas 11/18/71 memorandum to 
McKee. 

306 Memorandum dated November 16, 1971 from "J.D.L." [Jeremiah D. Lambert] to 
Gerald McKee, Jr. and Jack S. Thomas, "Re: U/Mass Legislative Report. " 



186 
The "claim" referred to above is probably the "delay 'claim" discussed in Appendix 
E to the present Final Report. 

In testimony before the Post Audit Subcommittee in 1976, Edward Carroll 
denied that he had done work for Endicott Peabody, contacted people for Peabody, 



or communicated with Peabody regarding state business 



307 



Carrcll testified 



that he did not recall contacting any of the members of the DiCarlo-Sirianni 



Committee in 1571 about the committee's investioation . 



308 



In interviews with 



Commission staff in 1979 and 1980, Carroll stated that he never did anything 
specifically on MBM's behalf at the suggestion of Peabody or anyone else. 
When shown many of the documents discussed in this Final Report that mention 
Carroll, Carroll not only denied the substance of those reports but suggested 
that Peabody may have falsified such documents to justify larger fees for the 
Peabody firm. 310 

On November 23, 1971 Peabody and Lambert met with N'cKee in New York to 



discuss the UMass/Boston project and other matters. In a letter to McKee 

312 
reflecting on the meeting, Peabody wrote: 

"I am glad you and I and Jerry Lambert had an opportunity 
to sit down in your office and discuss the Columbia Point 
contracts and other matters. While time was too short for 
a full discussion, I felt we came to a better meeting of 
the minds which will enable us to operate cooperatively for 
MEK's benefit in the future. 

"As I told you, I completely support the idea of 
marshal [ 1 ]inc all our assets and using them where necessary 
to achieve satisfactory solutions. What has dismayed me 
has been the failure to communicate directly any new moves 
which are being undertaken, and which may create a 



307 Car[r]ol[l] testimony, P. A. 4/10/78 at 6-7. 

3G£ icL a t 9-10. In a letter to the Post Audit Committee dated June 22, 1578, 
however, Carroll modified some of the categorical denials that he had made uncer 
oath. He admitted that "from time to time, I did keep [Peabody] advised as to 
some matters in the public field and check matters out for him about 
legislation." Letter dated June 22, 1978 from Edward Carroll to the Joint 
Legislative Committee on Post Audit and Oversight. He left others of his denials 
unchanged, such as his denial of contacting elected officials on behalf of 
Peabody to help Peabody in reference to any of Peabody's activities. Car[r]ol[l] 
testimony, F.A. 4/10/78 at 7. 

305 Carroll 7/31/79 interview, at 2-5; 2/25/80 interview at 1-3. 

310 Carroll 7/31/79 interview at 2-3. 

31 1 Peabooy law firm MB^ tub caro 31, entries for 11/23/71. 

312 Letter dateo November 26, 1971 from Endicott Peabody to Gerald McKee, Jr. 



187 

competitive situation between ourselves and others. This 
is damaging and not conducive to a successful all-around 
solution. Accordingly, I would appreciate your keeping us 
informed of any moves you are making with respect to the 
Columbia Point contracts and other matters in which we are 
involved so that we can serve you efficiently and 
effectively . " 

As discussed below, Ronald MacKenzie has testified that he received the first 
payment from MPM in relation to the DiCarlo-Sirianni Committee report on January 
20, 1972. Gerald McKee delivered the cash to MacKenzie who thereafter gave half 
to DiCarlo. 

Endicott Peabody's MBM billing record for January 24, 1972 reads: "DiCarlo + 

-z I -I 

Carroll + McKee." Peabody testified at the Post Audit Subcommittee hearing 
in 1976, 31A and before the Commission in 1980, 315 that he did not learn that 
MBM was paying DiCarlo until after reading a newspaper article about the matter 
in 1975. 



313 Peabody daily office record, 1/24/72. 

314 

Peabody testimony, P. A. 3/29/78 at 84-85. 

315 

Peabody testimony, Sp. Comm. 6/19/80 at 213, 



188 



Payments Made by MBM 

to DiCarlc and Mackenzie 

In testimony before the Commission in 1980, former State Senators DiCarlo and 
Mackenzie admitted receiving thousands of dollars in cash from MBM. 319 The 
receipt of that money, as well as the payment of that money, was illegal. 320 

Except for one payment of a few hundred dollars that was made directly to 
DiCarlo, all of the MBM payments were made to Mackenzie, out of DiCarlo's 
presence. Mackenzie then met with DiCarlo in the State House to split the 
payments . 

The payments to Mackenzie were made by Jack Tnomas, William Harding, and 
Gerald Mckee , Jr. of MBM. Thomas's detailed testimony about the amount, date, 
and method of delivery is corroborated fully by Mackenzie, as discussed below. 
Harding's testimony at the DiCarlo-Mackenz ie trial about deliveries to Mackenzie 
was vague. Harding acknowledged delivering "envelopes" but he was not sure when 
he delivered them or what (at least in amount) was in them. That information was 
supDlied through the testimony of Mckee, who also testified about one payment 
that Mckee made directly to Mackenzie. 

Mckee's testimony about amounts and dates on which MBM gave cash to Harding 
for Mackenzie has been disputed by Mackenzie, and Harding has testified to the 
Commission that his memory coincides more with Mackenzie's than with Mckee's. 
Moreover, Mckee's testimony about how much cash Mckee himself handed to Mackenzie 
has been disputed bv Mackenzie. 



319 DiCarlo testimony, Sp. Comm. 4/7/80 at 12-13, 24-27; Sp. Comm. 6/3/60 at 
116. Mackenzie testimony, Sp . Comm. 5/28/80 at 40-41, 43-44, 49-51. 

320 Rece ipt of the money not only violated the Hoods Act, as discussed in 
Chapter VIII below and for which DiCarlo and Mackenzie were convicted, but it 
also violated state campaign finance laws. G.l. c.55 s.13. Payment of cash to 
politicians such as DiCarlo and Mackenzie is illegal, G.L. c.55 s.9. as is 
payment of such a large amount, G.L. c.55 s.7, as is payment by a corporation, 
G.L. c.55 s.8. It is illegal to have made the payments even if the payments were 
made in reSDonse to an extortion. G.L. c.55 s.ll. The MBM witnesses were given 
Federal non-prosecution agreements in return for their testimony against DiCarlo 
and Mackenzie at the DiCarlo-Mackenz ie trial. Letter dated May 2, 1975 from 
United States Attorney James N. Gabriel to Arnold Stream, concerning a 
non-Drosecut ion agreement for Gerald R. [ sic ] Mckee [Jr.]. Letter dated June 24, 
1975 from United States Attorney James N. Gabriel to Arnold Stream, concerning a 
non-orosecution agreement for Anthony E. Mansueto and JacK S. Thomas. 



189 

It is difficult to fathom why MacKenzie would lie about the amount that he 
received from MBM. Unlike DiCarlo, whose admission of accepting MBM money was 
grudging and unspeci f ic , 321 MacKenzie's testimony about the receipt, sharing, 
and personal use of the MBM cash was embarrassingly graphic. After years of 
denying even to his immediate family and closest friends that he had taken MBM 
cash, 322 w hat possible benefit could MacKenzie expect to receive from stating 
that he received onlv $23,000 if the true amount had been $40,000? 

In any event, before a discussion the various alleged and admitted payments, 
it is important to emphasize that there is no dispute that MBM generated $48,000 
in cash between October 1971 and May 1972. • 52 - 5 The only question is what 
happened to the $25,000 of that $48,000 total that MacKenzie says did not go to 
him. There is evidence consistent with some or all of that $25,000 in MBM cash 
having gone to other people for other illegal purposes. That evidence is 
summarized briefly in the following discussion of MBM cash generations from 
October 1971 through May 1972 that were alleged to have gone to MacKenzie to 
share with DiCarlo. 

The October-1971 $5000 Cash Generation . On October 8, 1971, MBM 
wire-transferred $6,000 from its New York bank to its Boston bank. 324 An MBM 
check dated October 8, 1971, and drawn on MBM ' s Boston bank account was made out 
to "Cash" in tne amount of $5,000,325 j ne C hecK was cashed by MBM bookkeeper 
Sylvester Novell ine , 326 on instructions from MBM Regional Manager Jack 
Thomas. ^27 ^ j- ne DiCarlo-MacKenzie trial, Jack Tnomas testified that he Kept 



321 See DiCarlo testimony, Sp. Comm. 4/7/80 at 12, 14, 28. 

322 MacKenzie had admitted taking small contributions, in the hundreds of 
dollars, from Harding on occasion. MacKenzie had insisted that none of tnose 
small oayments were related in any way to the DiCar lo-Sirianni Committee. 

323 $40,000 of the $48,000 was identified at the DiCar lo-MacKenzie trial ana 
alleged to have gone to MacKenzie (to share with DiCarlo). The other $8,000 was 
not mentioned in the DiCar lo-MacKenzie indictments but has since Deen alleged to 
have gone to MacKenzie (to share with DiCarlo). MBM generated additional cash in 
the same period which is not relevant to the present discussion. 

324 McKee testimony, 4 DiC 1/27/77 at 80, 83, 93. 

325 MBM-Boston check #2699 dated October 8, 1971, payable to cash. 

326 Testimony of MBM Boston accountant Sylvester R. Novelline, 13 DiC 2/10/77 
at 100. 

327 Tnomas testimony, 11 DiC 2/8/77 at 24. 



190 
the $5,000 in cash in a sealed envelope locked in his office over the Columbus 
Dav weekend and that he gave the envelope to Harding on Monday, Octooer 11, 
1971.328 McKee testified that the money was wire-transferred to Boston for 
Harding to give to Mackenzie . 329 Harding testified that his expense report 
showed him to have met with Mackenzie on October 11, 1971 and that on various 
occasions, Dossibly but not definitely October 11, 1971, Harding handed envelopes 
to Mackenzie . 330 

In testimony before the Commission in 1980, however, Harding testified that 
his best recollection was that no money went to Mackenzie in relation to the 
DiCarlo-Sirianni Committee report until after the report was filed. ^1 jne 
report was not filed until November 10, 1971332 anc j no ^ printed until January 
10, 1972.333 

Ronald Mackenzie, in testimony before the Commission, said that he did not 
receive any money from MBM in relation to the DiCarlo-Sirianni Committee report 
in October 1971 or at any other time during 1971. Moreover, Mackenzie testifiea 
and offered other evidence that on October 11, 1971 he was in Dennisport, 
Massachusetts, at the summer home of Russell Dodds and was not in Boston to 
receive an envelooe from Harding. 334 

There is evidence suggesting that the $5,000 might nave gone to Aloert Manzi 
rather than to Mackenzie. In particular, Anthony Mansueto has testified tnat 
Manzi called him in October 1971 seeking a "contr ibut ion . "335 j ne Commission 
does not have complete telephone records for that period. From the partial 



328 _j_d. at 25-26. 

329 Mckee testimony, 4 DiC 1/27/77 at 63-84. 

330 Harding testimony, 12B DiC 2/9/77 at 23-32. 

331 Harding testimony, Sp. Comm. 6/4/80 at 42. 

332 Mills testimony, 20 DiC 2/22/77 at 180. 

333 House No. 5006, DiCarlo-Sirianni Committee Report, dated January 10, 1971 
[ i.e. 1972]. 

334 Mackenzie testimony, Sp. Comm. 5/28/80 at 54-55. See Defendants' Motion 
for a New Trial, United States v. DiCarlo, Mackenzie , Cr. Nos. 76-339-1, -2-S (D, 
Mass. November 9 , 1 Q 77 ) . Exhibit FT s tatement of Frank J. and Marion M. Kearns; 
Exhibit I, statement of Joan A. Dodds; Exhibit J, statement of Linda Dodds 
Murdock: Exhibit k, statement o f David F. and Serena Mackenzie. 

335 Mansueto testimony 2 M/M 2/13/79 at 71-72. 



191 
records available, the only documented telephone call between Manzi s office and 
MBM was on October 14, 1971.336 Mansueto says that he successfully put Manzi 
off on that occasion. 

In sum, it is difficult to resolve what happened to the $5,000 in cash that 
MBM generated in October 1971. 

The November 1971 $5000 Cash Generation . On November 19, 1971 an MBM check 
for $5,000 was cashed. 337 At the DiCar lo-MacKenzie trial, MBM President McKee 
testified that the money was given to William Harding to deliver to 
MacKenzie. 33 ^ Harding testified that his expense report listed a lunch with 
MacKenzie on November 20, 1971 and that Harding at various times gave envelopes 
to MacKenzie, with November 20, 1971 possibly being one of those times. 33 ^ 

MacKenzie, in testimony before the Commission, denied receiving MBM casn in 
November 1971 ..340 Further, MacKenzie provided documentary evidence indicating 
that he was in San Diego, California on November 20, 1971, not returning to 
Massachusetts until the following day .^^ 

There is evidence indicating that the $5,000 in MBM cash from November 1971 
may have gone to Albert Manzi rather than to MacKenzie. Anthony Mansueto has 
testified that he had a telephone conversation with Manzi on November 8, 1971 in 
which Manzi sought money from MBM.- 5 ^ Mansueto also has testified that Manzi's 
call was f ollowed up by William Masiello who called Mansueto late in NovemDer or 
early in December of 1971 to press Manzi's demands . ^^ Mansueto's pocket 



336 Massachusetts Turnpike Authority telephone records. 

337 mbm check #2417 dated November 19, 1971 for $5,000, payable to cash. 

338 McKee testimony, 5 DiC 1/31/77 at 9. 

339 Harding testimony, 12B DiC 2/9/77 at 34-40. 

340 MacKenzie testimony, Sp. Comm. 5/28/80 at 55. 

341 Entry dated November 20, 1971 in the diary of MacKenzie's father-in-law, 
Beresford F. Proctor. See also Statement of James J. Kane, ExhiDit L to 
Defendants' Motion for a New Trial, United States v. DiCarlo, MacKenzie . 

342 Mansueto testimony, 2 M/M 2/13/79 at 72-78, 119. 

343 id. at 117. 



192 

di^ry344 contains an entry reflecting a call from Bill Masiello on November 19, 
1971. Mansueto testified that he successfully put off Manzi and Masiello's 
demands for another six months. 345 

The January 1972 Payment from McKee to Mackenzie . Ronald Mackenzie testified 
to the Commission that he did receive MBM cash in relation to the 
DiCarlo-Sirianni Committee report, that he shared the cash with DiCarlo, and that 
the first of these MBM payments was handed to Mackenzie by MBM President Gerald 
McKee, Jr. in January 1972 at the Point After Lounge in Boston. 346 Mackenzie 
testified that the amount of that payment by Mckee was $5,000. 347 

Mackenzie's testimony corroborates testimony by Mckee at the 
DiCarlo-Mackenzie trial that Mckee flew to Boston on January 20, 1972 and went to 
the Point After Lounge in Boston where Mckee handed cash to Mackenz ie . 348 
However, Mckee testified that the amount involved was $10,000 -- not $5,000,349 

There is no question that MBM generated $10,000 in cash on January 20, 1972. 
However, two different procedures were involved. An MBM check for $5,000 was 
cashed at MBM's New York bank on January 20, 1972.350 The other $5,000 was 
generated by a wire transfer -- from the same bank account at the same bank in 
New York351 __ to MBM's Boston bank, where a $5,000 check was then drawn and 
cashed . 352 

Mckee testified at the DiCarlo-Mackenzie trial that he carried the New York 



344 Mansueto pocket diary 11/17/71 entry re: 11/19/71. 

345 Mansueto testimony, 2 M/M 2/13/79 at 117, and passim . 

346 Mackenzie testimony, Sp. Comm. 5/28/80 at 39-42. 

347 _id- at 41. 

348 Mckee testimony, 5 DiC 1/31/77 at 33-36, 40-45. 

349 Id. at 44. 

350 MBM check #2817 dated January 20, 1972 for $5,000 payable to cash. 

351 Testimony of Andrew H. Serell, 13 DiC 2/10/77 at 153. 

352 Mckee testimony, 5 DiC 1/31/77 at 34. MBM-Boston check #2937 dated 
January 20, 1972 for $5,000 payable to cash. 



193 
$5,000 cash on the airplane from New York to Boston, 353 an d that the Boston 
$5,000 cash was brought to McKee at the Point After Lounge, 354 where he 
combined it with the New York $5,000 and handed the total of $10,000 to 
MacKenz ie . 355 

When Commission staff asked McKee to explain why he would have carried $5,000 
with him but had the other $5,000 wire transferred up, McKee had no explanation. 

Moreover, there was no testimony by anyone at the DiCar lo-MacKenzie trial, 
and no statement by McKee in any Commission interviews, that MacKenzie or DiCarlo 
was unsatisified with the $5,000 McKee had brought up so that another $5,000 had 
to be wired up. If such a scenario had occurred, one mignt expect that McKee 
would have remembered it. Nor was there any suggestion by McKee that $5,000 was 
first wire-transferred ud, but that MacKenzie or DiCarlo then aemanded another 
$5,000 so that McKee had to fly up with it (such as because it was too late for 
another wire transfer). 

After discussing this matter with Commission staff, McKee agreed to a 
polvgraph examination on the issue, to be administered by a mutually-agreed-upon 
examiner. 356 ^ the polygraph examination, McKee again denied that $5,000 of 
the $10,000 generated on January 20, 1972 went elsewhere than to MacKenz ie . 357 
The examiner, after reviewing the polygraph charts, concluded that McKee was not 
telling the truth. 358 After McKee was told that he had failed the test on tne 
January 1972 payment issue, McKee remarked that he did not regard that issue as 



353 McKee testimony, 5 DiC 1/31/77 at 33-34. 

354 id. at 34, 43. 

355 T_d. at 43-44. 

356 See letter dated May 19, 1980 from Gerald McKee, Jr. to Edward [J.] 
McGrath, concerning suggested guestions for polygraph examination. 

357 ReDort dated June 9, 1980 of polygraph examination extended to Gerald 
McKee, Jr., prepared by Edward J. McGrath, staff examiner for Scientific Security 
- Ravmonri S. August, Inc., at 3. 

358 j^d. As discussed elsewhere in this report, polygraph results are not 
generally admissible as evidence in court, and the Commission is familiar witn 
the limitations of such examinations. 



194 

being Darticuiarly significant. 559 It should also be noted that in 1975 when 
McKee first discussed the January 1972 payment with McKee's lawyers, McKee said 
the amount involved was $5,000 -- according to the notes of one of McKee's 
lawyers . 5 ^0 

Two other aspects of the January 1972 payment to MacKenzie shoula be 
discussed. One relates to Mackenzie's testimony that the January 1972 payment 
was tne first he had received from MBM. The second relates to why McKee 
delivered the Davment himself, instead of sending someone else. 

McKee testified at the DiCarlo-MacKenzie trial that when McKee met with 

MacKenzie at the Point After Lounge on January 20, 1972, MacKenzie appeared 

"uneasy" and "embarrassed" 56 ^ and that after McKee handed the cash to 

MacKenzie 56 ^ __ 

"[MacKenzie] said he'd better be careful driving home. It 
would make a very unpleasant splash in the news headlines -- 
Senator in car crash with $10,000 cash." 

One might expect that if MacKenzie had already received $5,000 cash payments from 

MBM in October 1971 and November 1971 that MacKenzie would not be "uneasy," 

"embarrassed," or making such comments in January 1972. 

The fact that McKee delivered the money himself -- which is admitted by botn 
McKee and MacKenzie -- is also worth noting. Of all the casn payments that MBM 
has admitted or is alleged to have made in or out of Massachusetts, the January 
20, 1972 payment to MacKenzie is the only payment for which McKee has said tnat 
he was, or for which he has been alleged to have been, the courier. 

There are various possibilities as to wby McKee made tnis payment himself. 
One possibility is that it was the first payment to MacKenzie (to share with 
DiCarlo'i, and McKee felt that he should make this payment himself. Another 
possibility is that no one else was available to make the payment. A thira 
possibility is that McKee had to make the payment in order to patch up a 



359 McKee interview with Commission staff. 

360 See memorandum dated April 29, 1975 from RGS [Monasch Chazen & Stream 
attorney Robert G. Smith] to ACS [Arnold C. Stream], re: "MBM Commonwealtn 
matter , " at 3. 

361 McKee testimony, 5 DiC 1/31/77 at 43. 

362 Id. at 45. 



195 
deteriorated relationship between MBM ■ s normal emissaries -- Shields and Harding 
-- with MacKenzie and DiCarlo. There is evidence tending to support the third 
possibility, in conjunction with the first possibility. That evidence is 
supplied by testimony of Daniel Shields and Joseph DiCarlo, testimony that was 
given before the Commission and that had not been forthcoming at the 
DiCarlo-MacKenz ie trial. 

Shields testified to the Commission that a meeting involving Shields, 
Harding, DiCarlo, and MacKenzie took place in a lounge/restaurant in Boston, 
probablv on January 16 or 17, 1972. 363 Shields dated the meeting by reference 
to (a) his memory of the chronology of events, (b) reference to expense 
reports, 364 anC j ( c ) his memory that DiCarlo's hand was bandaged. 365 The 
Commission, in checking Shields's account, found evidence that DiCarlo broke nis 
hand on December 24, 1971366 a nd that DiCarlo's hand was bandaged for most of 
Januarv 1972.367 

Shields testified that DiCarlo lambasted MBM for not having made any of the 

payments that McKee had promised. 368 The discussion got so heated, Snields 

testified, 369 that Shields eventually -- 

"got eguallv belligerent and I asked [DiCarlo] if he wanted 
the money that was in my pocket.... [DiCarlo then] said that 
would do for starters." 

Shields testified that, after adjourning to the men's room with Harding, Shields 

and Harding returned to the table, whereupon Shields passed several hundred 

dollars under the table to DiCarlo. According to Shields's testimony 370 -- 



363 Shields testimony, Sp. Comm. 6/2/80 at 46-48. 

364 Shields's American Express card receipts for the Sheraton-Boston on 
January 16, 1972 and for Charley's Eating and Drinking Saloon on January 17, 1972. 

365 Shields testimony, Sp. Comm. 6/2/80 at 53. 

366 DiCarlo testimony, Sp. Comm. 6/3/80 at 116-117. 

367 William R. DiMento 9/5/79 interview. 

368 Shields testimony, Sp. Comm. 6/2/80 at 53-56. 

369 j_d. at 56. 

370 Id. at 59. 



196 

"Senator DiCarlo [then] counted [the money] and asked me what 
this was.... I said that is what I had in my pocket.... 
[DiCarlo] said it [ i.e. , the small amount of money, in 
comparison with what DiCarlo was owed by MBM] was an 
insult.... I believe I responded I tnought it was more than ne 
was worth . " 

When the Commission called DiCarlo to testify, he indicated that he did not 

dispute Shields's account . 371 

Shields further testified that after this acrimonious meeting with DiCarlo, 
Shields informed McKee what had happened. 372 According to Shields, McKee 
responded that he would take care of the situation . 373 if the 
DiCarlo-Shields-MacKenzie-Harding meeting did occur on January 16 or 17, 1972, 
that might explain why McKee came to Boston with money for MacKenzie (to share 
with DiCarlo) on January 20, 1972. 

As to the $5,000 cash that MacKenzie admits having gotten from McKee on 
Januarv 20, 1972, MacKenzie testified to the Commission that he (MacKenzie) tooK 
$2,500 of the monev, put it into a plain white envelope, and handed it to DiCarlo 
in DiCarlo's State House office on January 21, 1972.374 

Endicott Peabody testified to the Commission , 375 
and at the Post Audit SuDcommittee hearing, 376 tnat MBM told Peabody notning 
about the payments to DiCarlo and MacKenzie. Peabody's MBM billing record for 
January 24, 1972 reads: 

"DiCarlo + Carroll + McKee 2.0 [hours]." 

When asked about the entry by the Commission, Peabody test i fied : 377 



371 D'Carlo was called before Shields had testified. However, as DiCarlo 
acknowledged, DiCarlo had been informed by Commission staff of Shields's expected 
testimony. DiCarlo testimony, Sp. Comm. A/7/80 at 25-27. DiCarlo was called 
again to testify on the dav after Shields had testified. DiCarlo testified that 
he had no memory of such a meeting with Shields but, DiCarlo added, "I'm not 
saying that it didn't occur." DiCarlo testimony, Sp. Comm. 6/3/80 at 118; 
117-119. 

372 Shields testimony, Sp. Comm. 6/2/80 at 59-60. 

373 Id. at 60. 

374 MacKenzie testimony, Sp. Comm. 5/28/80 at 41. 

375 Peabodv testimony, Sp. Comm. 6/19/80 at 231. 

376 Peabody testimony, P. A. 3/29/78 at 85-86. 

377 Peabody testimony, Sp. Comm. 6/19/80 at 214. 



197 

"It appears from the daily office record that I put down one hour 
and corrected that to two hours. So, that it may be that on that 
date I spoke to DiCarlo and Carroll or spoke to Carroll about 
DiCarlo or the report. I have no idea what I spoke to them about. 
I have no memory. Later spoke to McKee or talked with him." 

The February 1972 Payment from Harding to MacKenzie . Ronald MacKenzie 
testified to the Commission that William Harding gave $8,000 in MBM cash to 
MacKenzie in the men's room at the Parker House restaurant during February of 
1972. 378 MacKenzie said that Harding mentioned that he was a bit short and 
that Harding wanted to know if he could keep $400 of the $8,000,379 MacKenzie 
testified that he agreed to let Harding have $400, and that when MacKenzie got 
ready to share the money with DiCarlo, MacKenzie gave DiCarlo his full $4,000 -- 
with MacKenzie keeping just $3,600 for himsel f . 380 MacKenzie said that he 
handed DiCarlo $4,000 in MBM cash in a portion of the State House that MacKenzie 
described as the Senate "locker room. "381 

At the DiCarlo-MacKenz ie trial, MBM President McKee testified that Harding 
was given $10,000 in cash in February 1972 to give to MacKenz ie . 382 McKee 
identified a $10,000 MBM check as the source of the cash. 383 as explained in 
more detail in Chapter V of this Final Report, there is evidence indicating that 
the proceeds of the $10,000 check identified by McKee actually went to AlDert 
Manzi, via William Masiello. The money for MacKenzie apparently came from other 
cash generations performed by MBM in February 1972 and discussed in Chapter V. 

The May 1972 Payment from Jack Thomas to MacKenzie . In testimony before the 
Commission , 384 Ronald MacKenzie agreed, essentially in full, with MBM Vice 



378 MacKenzie testimony, Sp. Comm. 5/28/80 at 42-43. 

379 _ld. at 43. 

380 16_. at 44. 

381 Id. 

382 McKee testimony, 5 DiC 1/31/77 at 52-54. 

383 MBM check #2987 dated 2/16/72 for $10,000 payable to cash 

384 MacKenzie testimony, Sp. Comm. 5/28/80 at 48-49. 



1S8 
President Jack Thomas's testimony at the DiCarlo-MacKenzie trial- 5 ^ 5 about 
$10,000 in MBM cash that Thomas said he gave to MacKenzie on May 12, 1972. The 
cash was handed to MacKenzie at MBM's office on Boylston Street, Thomas and 
MacKenzie agree. 

MacKenzie further testified that he had never befcre handled $10,000 in cash 
and that, when he gave $5,000 of the cash to DiCarlo in the Senate locker room on 

■TO C 

the following day, MacKenzie remarked: 

"Here's five big ones, Joe, from these guys." 






DiCarlo's Visit to 
MBM's New York Office 

This discussion of the DiCarlo-MacKenzie activities in regard to MBM 
concludes with consideration of a meeting that took place in New York between 
DiCarlo, MacKenzie and McKee. Testimony at the DiCarlo-MacKenzie trial about 
this meeting was hotly contested and was significant in the Government's case, 
particularly against DiCarlo. 

In brief, the testimony at the DiCarlo-MacKenzie trial was that DiCarlo and 
MacKenzie went to New York, met with McKee in MEM's office, went for drinks with 

some other MBM employees, and then had dinner at the Gaslight Club in New York 

3F 7 
with McKee and Shields. According to the DiCarlo-MacKenzie trial testimony, 

DiCarlo complained at the Gaslight Club about MBM's lateness in making payments 

and said that if MBM would be prompt in meeting its commitments, DiCarlo could be 

3P P 

of great assistance to MBM in Massachusetts. 

At the DiCarlo-MacKenzie trial, the DiCarlo-MacKenzie defense team tried to 
attack the testimony of the New York meeting by demonstrating that the meeting 



3£5 Thomas testimony, 11 DiC 2/E/77 at 74-83. 

366 MacKenzie testimony, Sp. Comm. 5/28/80 at 40, 49-50. 

367 McKee testimony, 5 DiC 1/31/77 at 73-78, 83-86; Shields testimony, 15 DiC 
2/14/77 at 87-93. 

388 McKee testimony, 5 DiC 1/31/77 at 75-76, £3-85; Shields testimony, 15 DiC 
2/14/77 at 93. 



199 
could not have occurred on the date and time that the MBM witnesses said it 
did.^ 85 After DiCarlo and Mackenzie were convicted, they continued to argue 
that the meetino could not have occurred when the MBM witnesses said it 



did 



!90 



Moreover, they argued that proof that the meeting occurred on some 



other date should entitle them to a new trial, since they claimed that Judge 
Skinner had instructed the jury that it had to acauit DiCarlo unless the jury 

found that the meeting occurred on July 6, 1972 -- as the MBM witnesses had said 

391 
— and not on any other date. 

Before a discussion about when the meeting occurred, several observations are in 
order. First, there is now no dispute that DiCarlo and Mackenzie did visit MBM's 
office and thereafter go to the Gaslight Club.' Second, Mckee, Shields, and 
Mackenzie have all testified that DiCarlo complained on that occasion about MBM 
not paying promptly. ^^ DiCarlo has not disputed this.'' Third, in 
reviewing the transcript of Judge Skinner's charge to the jury, the Commission 
can find no clear instruction that the jury had to acouit unless it found the New 
York visit to have occurred on July 6, 1972 and on no other date . Fourth, the 
testimony about the meeting would make as much sense, sno be equally as damaging 

to DiCarlo, if the meeting had occurred in March cr April of 1972, which is when 

39 5 
DiCarlo and Mackenzie believe that it occurred. Indeed, the testimony would 

be as damaging even if the meeting took place on some entirely different date. 



389 see Final Arguments of Defense Counsel, DiC 2/24/77 at 36-43. 

39C see Defendants' Motion for a New Trial, United States v. DiCarlo, 
Mackenzie , at 3 , 6 - 9 . 

391 see United States v. DiCarlo, Mackenzie , 575 F. 2d 952, 960-61 (1st Cir. 
1978) . 

392 Mackenzie acknowledged his presence at Sp. Comm. 5/28/80 at 45-48. 
DiCarlo acknowledged his presence at Sp. Comm. 4/7/80 at 29. 

353 Mckee testimony, 5 DiC 1/31/77 at 75-76; Shields testimony, 15 DiC 2/14/77 
at 93; Mackenzie testimony, Sp. Comm. 5/28/80 at 47-48. 

394 DiCarlo testimony, Sp. Comm. 4/7/80 at 29. 

395 Mackenzie testimony, Sp. Comm. 5/28/80 at 45-46. 



200 
Nonetheless, because of DiCarlo's heavy emphasis on the incorrectness of the 
date of the meeting, the Commission did spend considerable time trying to 
determine when the meeting occurred. After intensive investigation, no 
definitive answer is possible. Assuming that the New York visit did involve a 
stop at the Gaslight Club (as all the witnesses testified), and assuming that the 
bill was paid by a charge to Shields's account (since Shields apparently was the 

396 
only one who had a "key" admitting him to the club), and assuming that the 

microfilm of Gaslight Club receipts made available to the Commission is a 

complete and accurate record of all such receipts for the period in ouestion, the 

only reasonable possibilities for the date of the New York visit are October 16, 

1971; December 29, 1971; May 2, 1972; and July 6, 1972. Those are the dates on 

which there were Shields Gaslight Club receipts involving enough "guests" at the 

table, as reflected on the receipts. Shields, MacKenzie, and DiCarlo all 






recalled the New York visit as occurrinc Purine cold weather. 



397 



Their 



recollect iens were seconded by William Harding and by Harding's then-fiancee, who 

•2CO 

met with DiCarlo and MacKenzie on the day of the New York visit. ^ That seemed 
to rule out the May 2, 1972 and July 6, 1972 dates. 

As to October 16, 1971, DiCarlo's appointment calendar indicates that DiCarlo 
served as toastmaster at a Sons of Italy banquet in Cambridge, Massachusetts on 
that date. The appointment calendar indicates that the banouet was 
scheduled to start at 6:30 p.m. DiCarlo could not have been in New York 
that night if he were present at the Sons of Italy banouet. The Commission 
contacted organizers of the banouet who confirmed, from their memory, that 



256 Shields testimony, Sp. Comm. 6/2/8C at 76-77; 15 CiC 2/14/77 at 91. 

'57 Shields testimony, Sp. Comm. 6/2/80 at 73; MacKenzie testimony, Sp. Comm. 
5/28/80 at 46; DiCarlo 12/8/78 interview at 9. 

258 Affioavit of William Harding and affidavit of Salme Harding, Exhibits W 
and X to Defendants' Motion for a New Trial, United States v. DiCarlc, MacKenzie 

255 DiCarlo office appointment calendar, at 10/16/71. 

400 id. 



201 
DiCarlo did serve as toastmaster, as he had been scheduled to do. Thus, October 
16, 1971 is unlikely as the date of the New York visit. 

There is more reason to believe that the New York visit occurred on December 
25, 1571. Shields's recollection is that the precise agreement between DiCarlo 
and McKee about how much cash would be paid to DiCarlo (through MacKenzie) was 
made during DiCarlo's New York visit. If that is so, and if the first 
payment was not made until January 1972, then December 25, 1571 would be a 
logical date for the New York visit. 

Moreover, Shields told Commission staff that Shields had a vague recollection 
of having seen DiCarlo at the Gaslight Club with DiCarlo's hand bandaged or his 
arm in a sling, and of DiCarlo's not joining the others in drinks because of 
doctor's orders to avoid drinking while taking the pain-killers for his recently 
injured hand. 402 Since DiCarlo broke his hand on December 24, 1971, A03 and 
since the cast apparently came off about a week thereafter, there is 
additional reason to believe that the New York visit occurred on December 29, 
1971. Moreover, the attorney who interviewed MBM President Gerald McKee, Jr. in 
1975 recalled in an interview in 1575 with Commission staff that McKee had 
mentioned that DiCarlo had a bandaged hand at the Gaslight Club. And McKee 
told Commission staff that he had a vague recollection of DiCarlo's having a 
bandaged hand at the Gaslight Club. A0£ 

MacKenzie and DiCarlo, however, have told Commission staff that they are firm 
in their recollections that the New York meeting took place in March cr April of 



1572 



407 



Moreover, MacKenzie told Commission staff that he is sure that 



401 Shielos testimony, Sp. Comm. 6/2/8C at 75; Shields 2/24/60 interview at 7, 

402 Shields 2/24/80 interview at 7. 

403 DiCarlo testimony, Sp. Comm. 6/3/80 at 116-117. 

404 William R. DiMento 5/5/75 interview. 

405 Notes of 11/6/75 interview of Robert G. Smith by Special Commission staff 

406 McKee 5/5/75 interview. 

407 MacKenzie 4/2/80 interview at 6; DiCarlc 12/8/78 interview at 5. 



202 

DiCarlo's hand was not bandaged during the New York visit. z * 08 Thus, this 

Question retrains unresolved. ^ 

The proceedings before, curing, and after the DiCarlo-MacKenzie trial are 

discussed in Chapter VIII of this Final Report. Before concluding the present 

chapter, we turn to one more challenge that MEM faced in regard to its 

UMass/Eoston contract. 

The Investigation in 1972-73 by Auditor Joseph A. Davey 
of the Post Audit Eureau 

Scarcely six months after MBM had made its final DiCarlo-MacKenzie payment, 

MEM learned that it was faced with still another challenge to its UMass/Eoston 

contract. An auditor named Joseph A. Davey, who had formerly worked for the 

State Auditor's office and whc in 1972 was working for the Joint Legislative 

Committee on Post Audit and Oversight's Post Audit Eureau, was looking with 

k l ? 
a critical eye into various aspects of MEM's UMass/Boston contract. 

Davey's investigation never resulted in any final or public report, and 

questions were raised in 1977 about whether Davey's investigation had been 

improperly halted because of political pressure exerted on MEM's behalf. 

Since Davey had died in 1975, he was not available to answer the Questions. 



408 MacKenzie 4/2/80 interview at 5. 

409 DiCarlo told Commission staff that he 
having stayeo at the Warwick Hotel in New 
added that MBM had paid the bill. DiCarlo 
12/25/71 expense report. The Commission c 
files for the Warwick Hotel. The slip was 
someone else stayed at the Warwick Hotel o 
charge slip contained the wrong date, and 
or December 15, 1971 when he went (apparen 
New York with MBM officials. Mackenzie te 
Or, perhaps the receipt should have said D 
and MacKenzie. The hotel apparently disca 
no way tc reach a conclusive determination 

The Commission also found airline ticket c 
Boston to New York dated December 29, 1971 
dated December 30, 1971, charged to the Am 
but bearing signatures that were obviously 
bear the notation "OK" and initials; the 
consistent with DiCarlo's having charged t 
produce his normal signature because of an 



recalled DiCarlo and Mackenzie 
York on the night in question. He 

12/8/78 interview at 9. Harding 
ould find only one charge slip in MBM's 

datec December 25, 1971. Perhaps 
n December 25, 1971. Or perhaps the 
perhaps MacKenzie stayed at the Warwick 
tly without DiCarlo) to the 21 Clut in 
stimony, Sp. Comm. 5/28/80 at 33-36. 
ecember 29, 197] end was for DiCarlo 
rded its records long age, so there is 

from among these alternatives. 

redit card receipts for a flight from 
and for a flight from New York to Boston 

erican Express account of Joseph DiCarlo 
not his normal signature. Both slips 

necessity for approval of the charges is 

he tickets, but having been unable to 
i n jured hand . 



410 Testimony of William Finnegan, Sp. Ccmrr. 5/29/80 at 11. 

411 Id. at 10. 

412 p. a. Report at 92. 

413 id. at 92. 

414 iq. s t 96. 



203 

The Post Audit Committee established a special subcommittee , chaired by Rep. 
Gerald M. Cohen (D-Andover) to investigate the matter. The Post Audit 
Subcommittee held four months of public and private hearings, culminating in a 
final report which was filed on August 14, 1978. The Subcommittee's work 
was concluded and its files were forwarded to the Commission as a result of the 
legislation which established the Commission. i7 

The Commission's Final Report will not review at length the matters covered 
by the Post Audit Subcommittee in its report. However, a brief summary is 
necessary in order to gain a full perspective on MBM matters and since there is 
some new evidence that relates to the matters reviewed by the Post Audit 
Subcommittee . 

Perhaps the most startling new testimony has been given by William H. 

Finnegan, the staff director of the Post Audit Bureau in 1972-7?. During the 

Post Audit Subcommittee hearings in 1578 Finnegan's superior, Post Audit 

Committee Chairman Gerald Lombard (D-Fitchburg) , testified that Finnegan had told 

Lombard about a meeting that Finnegan had had with Senator Joseph DiCarlo in 
418 



When Finnegan testified to the Post Audit Subcommittee in 

419 



regard to MBK 

1978, he denied having had such a meeting with DiCarlo 

In testimony before the Commission in 1980, however, Finnegan testified that 
DiCarlo summoned Finnegan to DiCarlo's office late in 1972. According to 
Finnegan's testimony, DiCarlo expressed concern about Post Audit Bureau auditor 
Davey's investigation into the MBM-UMass/Boston contract. Finnegan further 
testified that DiCarlo instructed Finnegan to tell Post Audit Chairman Lombard 
that DiCarlo felt that there should not be a new report about MPM contract 



415 Id. at 1. 

416 Joint Committee on Fost Audit and Oversioht, Subcommittee Report on 
M.B.M., dated August 14, 1978. 

41" 7 Commonwealth of Massachusetts, Resolves, c. 5 (1978), at 4. 

*18 Testimony of Gerald Lombard, P. A. 3/15/78 at 166-167. 

415 Finnegan testimony, P. A. 3/20/78 at 123-124. 

420 Finnegan testimony, Sp. Comm. 5/29/80 at 16. 

421 ig. s t 16-17. 



204 
since DiCarlc had already investigated it and did not "want to be embarrassed by 
any subseouent legislative action on that subject." z Finnegan testified that 
he relayed DiCarlo's message to Lombard, who replied that since DiCarlo was 
likely to become Senate Majority Leader, his wishes should be respected and the 
investigation by Davey should be discontinued. DiCarlo, in testimony to the 
Commission, denied that he had such a meeting with Finnegan. 

Although Finnegan has said that he told Davey not to pursue the MEM matter, 
Finnegan testified that Davey was an independent person who decided without 
authorization to continue looking into MEM. ^25 MEM learned that Davey was 
pursuing the matter and decided to take further action. 

On November 24, 1972, Jeremiah Lambert -- Endicott Peabody's partner -- wrote 
to MBM President McKee that Peabody had learned from Frederick Kussman of the EEC 
that the Post Audit Committee was looking into the MBM-UMass/Boston 



contract 



426 



Lambert asked whether McKee wanted the Peabody firm -■ 



"to find out what specific issues have been raised as to MEM's 
performance to date so that these can be dealt with if they 
stand in the way cf extension of Fhase I and payment of the 
oelay claim." 

McKee apparently answered affirmatively, because Peabody thereafter telephoned 

Post Audit Eureau Director Finneaan ano reouested a meeting. 



A meeting between Peabody anc Finnegan took place on January 29, 197 



, 428 



422 id. at 17. 

423 Id. at 16. 

^ h DiCarlo testimony, Sp. Comm. 4/7/80 at 28-29. 

425 Finnegan testimony, Sp. Comm. 5/29/80 at 16. 

^26 Letter dated November 24, 1972 from Jeremiah D. Lambert to GeraJd McKee, 

Jr. Lambert referreo to the committee as "the standing legislative Committee on 
Investigation. " 

427 Finnegan testimony, Sp. Comm. 5/25/80 at 21. 

428 Peabody law firm MBM tub card 48. 



205 

Finnegan was sent a memorandum dated January 29, 1973 by auditor Davey. ^ The 

memorandum, with exhibits, reviewed MEM's UMass/Boston contract. The memorandum 

said, in part: 

"An examination of the contract ... for Project Management 
Services University of Massachusetts - Columbia Point ... 
indicates that a [fixed] fee of 1.53% of $150,000,000 was paid 
to this firm for project manaoement services for Phase I (fee 
2,295,000). 

"Examination of the budget summary sheet for Phase I, as of 
December 1, 1972, indicates total project estimated cost of 
$134,289,953.50. 



"[I]t appears that the project estimated costs should be 
reduced by $14,350,000 to arrive at the project costs under 
the direction of the project manager. 

"From the foregoing it appears as though the fixed fee should 
have been based on approximately $120,000,000 instead of the 
$150,000,000 appearing in the fixed fee contract of 
[McKee-Berger-]Mansueto, Inc. ..." 

In essence, Davey was suggesting that MBM may have been overpaid more than 

$450,000 on the Phase I fixed fee (since the difference between $150 million and 

$120 million is $30 million, and 1.53% of $30 million eauals $459,000). 

About a week after Peabody's January 29, 1973 lunch with Finnegan at Jimmy's 

Harborside restaurant/ 30 Peabody wrote a " PRIVATE AND CONFIDENTIAL " letter to 



McKee - 5 - 1 which said, in part: 



is n 

When 

Repr 

the 

Legi 

Repr 

dece 

Audi 

Mass 

and 

Bucz 

told 

he w 



"Las 
ow th 

I wa 
esent 
House 
slati 
esent 
nt pe 
tor , 
achus 
does 
ko] s 

me t 
ill p 



t week 
e Dire 
s Gove 
atives 

He 
ve Com 
at i ve 
rson . . 
named 
etts c 
net be 
aid in 
hat be 
resent 



I had 
ctor of 
rnor, h 

and al 
is a st 
mitt ee , 
Jerry L 
. . At 
Davey , 
ontract 
lieve e 

his at 
fore he 

them t 



lunch in Boston with Eill Finnegan who 
the Legislative Post Audit Bureau.... 
e was a member of the House of 
so served as my legislative assistant in 
raight shooter and an able person. The 

under which he serves, is chaired by 
ombard of Fitchburg who is a fair and 
the present time a former Assistant 
is looking at the University of 
s. According to Finnegan, he is fair 
verything the Auditor [presumably 
tacks on MBM last year. Finnegan has 

publicizes any matters from his Bureau, 
o me in advance .... 



"He provided me with the following information: 



" - The Auditcr [presumably Buczkc] is preparing an 
attack on the UMass project in South Boston. MBM will be 
included. Apparently, he is still licking his wounds over 
what happened in the legislative investigation [presumably by 
the DiCarlo-Sirianni Committee] last year. 

" - Davey is examining the methane gas problem which was 
raised by the legislature. Finnegan hopes that MBM did all 
that was required to be done by it during the 6-month delay 
period ... . 



429 Interoffice memo dated January 29, 1973 from J. A. Davey to W.H. Finnegan. 

430 Finnegan testimony, Sp. Comm. 5/29/80 at 25. 

431 Letter dated February 7, 1973 from Endicott Peabody to Gerald McKee, Jr. 



206 

" - A complaint has been made that there was no supervision by MBM 
with respect to two items which were specifically included in its 
contract. Finnegan was vague about this. Perhaps we can find out more 
about it later. 

" - Renegotiation of the MBM contract may be reouested on the 
grounds that the contract actually cost less than first estimated and 
the fee should be based on the lower cost. 



"I expect to be in Boston at least once a week during the next 
several weeks and will communicate with Jack Thomas when there. Some 
followup of this letter is called for. While I am sending a copy to 
Jack Thomas, I expect both you and him not to disclose it to others." 

In a letter dated February 9, 1973 ^cKee responded to Peabody, "^ saying -- 

"I appreciate the information contained in your February 7th 
letter and feel better about the U/Mass audit now that you are 
following it up for us. I am sure Jack Thomas will be meeting 
with you and will provide you with whatever you need to be 
effective for us." 

Both Peabody and Finnegan have testified that there was nc follow-up by 
Peabody/ 33 

Nc report ever emerged from the Post Audit Bureau, however. ' According 
tc Finnegan, Davey became ill and left the Bureau, and no further wcrk regarding 
MBM was dene because Davey had not been supposed tc investigate MEN"s contract in 

4 3 c 

the first place. 

During the 197E Pest Audit Subcommittee hearings, there was speculation that 
Davey had been fired as a result of the Peabody-Finnegan meeting. However, 
Finnegan has presented the Commission with a hand-written letter dated November 

28, 1573 frctr Davey to Finnegan in which Davey indicated appreciation that 

4 37 
Finnegar had offered Davey further work with the Pest Audit Bureau. 



432 Letter dateo February 9, 1973 from Geralc Mckee, Jr. to Endicott Peabody. 

433 Peabody testimony, P. A. 3/29/78 at 69, 76; Finneoan testimony, Sp. Comm. 
5/29/80 at 29. 

434 F.A. Report at 92, 95-96. 

435 Finnegan testimony, Sp. Comm. 5/29/80 at 33-34; P. A. 3/20/78 at 60-61. 

436 p. a. Report at 95-96. 

^37 Letter dated November 28, 1973 from Joseph A. Davey to William H. Finnegar. 



207 
In 1978, after the first accusations appeared in print that the Post Audit 
Bureau had quashed Davey's investigation, Finnegan -- with Lombard's approval -• 
had notes of Post Audit Committee meetings from 1973 altered to eliminate 
references to MBM and/or a UMass investigation. "^ Later, Finnegan and Lombard 
decided that their alteration of the notes should be disclosed. After Lombard 

told the Post Audit Committee about the deletions, Finnegan was discharged and 

lx , 9 
Lombard eventually resigned his chairmanship. 



438 p. a. Report at 96-97. 

439 p. a. Report at 97-101 



206 

CHAPTER VIII 

THE INVESTIGATION, PROSECUTION, APPEALS, AND 

PCST-TPIAL MOTIONS OF JOSEPH DiCARLO AND RONALD MackENZIE 

In 1977, Massachusetts State Senate Majority Leader Joseph J.C. DiCarlo 

(D-Revere) and Massachusetts State Senator Ronald C. Mackenzie (R-Eurlington ) 

were tried and convicted of federal felonies in connection with MEM. Their 

defenses at trial, and particularly their post-trial motions, raised rrany 

Questions in the press and among the public, leading in large part to the 

creation of the Commission. 

Chapter VII of this Final Report considered the evidence that the Commission 

discovered concerning the substance of the activities in 1571 and 1972 of DiCarlo 

and Mackenzie which gave rise to the 1977 trial. The present chapter sets forth 

the evidence concerning the federal investigation, trial, and post-trial 

proceecings involving DiCarlo and Mackenzie. 

The Investigations of MEM in Philadelphia 

Which Led to the First Allegations 

About DiCarlo and Mackenzie 

MBM President Gerald Mckee, Jr. has testified that the DiCarlo-Mackenzie case 

resulted from Mckee's decision, as a matter of conscience and 

public-spiri tedness , to tell prosecuting authorities about the "extortion" of MFM 

by DiCarlo and Mackenzie in 1971 and 1972. Mckee first gave information about 

2 

the DiCarlo-Mackenzie "extortion" in late 1974 to federal officials from 

Philadelphia, Pennsylvania. Since one of the Commission's major 
responsibilities was to investigate charges by DiCarlo and Mackenzie that they 
were innocent and had been convicteo largely through perjured testimony by 
Mckee, the Commission felt that it was necessary to lock into the facts 
surrounding Mckee's cecision in 1974 to tell authorities abcut DiCarlo and 
Mackenzie. 



i Mckee testimony, Sp. Comm. 6/26/80 at 11-12. 

2 Id- 

3 Mckee testimony, 14 M/M 3/7/79 at 124-125. 

^ Defendants' Motion for a New Trial, United States v. CiCerlr, Mackenzie , 
Cr. 76-339-1-S, 76-339-2-S (D. Mass., November 9, 1977) , at 5-6, e. 






209 
McKee was talking tc federal authorities from Philadelphia in 1974 because 
those officials were investigating allegations that MBM, through its wholly owned 
subsidiary MCM, had illegally obtained a contract with the Philadelphia 
International Airport. The Philadelphia FBI investigation had apparently 
started in 1972; Philadelphia Mayor Frank Fizzo disclosed to the press on 
December 12, 1972 that a federal grand jury was investigating Philadelphia 
airport contracts. On December 22, 1972 Fizzo called for a city investigation 
of kickback charges related to the airport contracts, and a year later -- in 
December 1973 -- a Philadelphia Special Investigating Grand Jury called upon the 
newly-elected district attorney to investigate and prosecute certain public 

officials and certain officials of the Philadelphia Democratic City Committee for 

p 
establishing "a system of political blackmail" in Philadelphia. The special 

grand jury, whose presentment was made public, reported that it had heard 

testimony that MBM's wholly-owned subsidiary MCM had obtained a contract at the 

Philadelphia airport through political figures who appeared to have beer 



motivated by potential "political contributions 



,,10 



5 McKee testimony, 14 M/M 3/7/79 at 124-125. 

£ Gene Harris and S. Fobert Jacobs, "Fizzo Discloses U.S. Grand Jury Is 
Probing Airport Contracts," Philadelphia Evening Bulletin, December 12, 1972. 

7 Gene Harris, "Fizzo Orders Probe of Kickback Charoes," Philadelphia Eveninc 
Bulletin, December 23, 1972. 

8 Philadelphia Special Investigating Grand Jury, June Term 1972, Twelfth 
Presentment, at 3. 

9 See Joseph F. Daughen, "Jury Wants Top Phila. Democrats Prosecuted fcr 
Political Blackmail," Philadelphia Evening Bulletin, December 27, 1973. 

1G Philadelphia Special Investigating Grand Jury, June Term 1972, Twelfth 
Presentment, at 1-2, 8, 15-16. The special grand jury heard testimony that 
illegal kickbacks in exchange for the award of city design and engineering 
contracts were demanded and received by John O'Shea (treasurer of the Democratic 
City Committee and president of the Thomas J. LaBrum Associates public relations 
firm) and by Leon Nurock (an optometrist active in fundraising for the Democratic 
City Committee). O'Shea, his firm, and Nurock all received substantial amounts 
of money from MBM/MCM for "consulting services." By May of 1972, when MCM 
arranged to have a share of the Philadelphia airport contract through a joint 
venture, MCM had paid Nurock a total of $24,5CC. Through 1973, according to 
checks available to the Commission, MBM/MCM paid Nurock $47,250 in consulting 
fees and $10,547.91 in expenses. MBM also paid LaErum Associates at least 
$6,619.15 in 1973-74, and John O'Shea at least $8,0CC in the same years, 
according tc checks available to the Commission. For further discussion see 
Appendix E to the present Final Peport . 



210 
The evidence accumulated by the special city grand jury was turned over tc 
the FEI and to a newly created state-funded special prosecutor. Py 1974, 
MEM activities were being investigated by the United States Internal Revenue 
Service as well as the FBI and the Philadelphia United States Attorney's 



Office 



12 



On October 28, 1974, McKee spoke to an FBI agent from Philadelphia about 
DiCarlo and Mackenzie. McKee has said, as previously noted, that he brouph 
up the subject voluntarily and without prompting. The Philadelphia FEI 
agent, Klaus Rohr, in testimony at a hearing in 1978, agreed that McKee had 
volunteered the Boston information. A former Assistant United States 
Attorney in Philadelphia, Richard Galli, told Commission staff that he was also 
present at the meeting and that McKee brought up the DiCarlo-MacKenzie matter out 
of the blue. 16 

Arnold C. Stream, who served as McKee's attorney in 1974, told Commission 
staff (pursuant to a waiver of attorney-client privilege by McKee) that 
Stream had advised McKee in 1974 to disclose the DiCarlo-MacKenzie matter and 
testify about it to the Philadelphia federal grand jury. Stream explained that by 
this procedure McKee's activities in regard tc DiCarlo and MacKenzie would be 
encompassec within the immunity agreement that Stream had negotiated for 



McKee 



16 



11 See Jeff Nesmith, "Phillips Says He Can't Prosecute Firm Eecause U.S. Probers 
Had the Evidence," Philadelphia Evening Bulletin, June 25, 1975. 

12 See United States Department of the Treasury, Internal Revenue Service, 
document receipt dated March 25, 1974, for the return of four checks to MCM, 
Inc.; undated list of books and records of MCM for the calendar year ended 
December 31, 1973 submitted to IRS; letter dated November 19, 1974 from MEM 
treasurer Donald W. Ziegler to FEI Special Agent Klaus C. Pchr, concerning 
certain 1972 MEM checks; memorandum dated December 6, 1974 from Donald Ziegler tc 
MEM comptroller Stanley Emerson, concerning a subpoena for ^B^ bank statements 
and canceled checks for 1972 and 1973 issued by the U.S. District Court for the 
Eastern District of Pennsylvania. 

13 hearing on Motion for Production of Witness Statement, United States v. 
DiCarlo, MacKenzie (D. Mass., September 6, 1978), at 4. 

1* McKee testimony, Sp. Comm. 6/26/80 at 11-12. 

15 Testimony of Klaus C. Rohr, 9/6/78 Hearing on Motion for Production of 
Witness Statement, at 24-25. 

1£ Notes of 10/2C/78 interview of Richard Galli by Special Commission staff, 
at 1. 

1 7 Letter dated September 13, 1979 from Gerald McKee, Jr. tc attorney Arnold 
C. Stream, waiving attorney-client privilege. 

18 Notes cf 9/28/79 interview of Arnold C. Stream by Special Commission staff, 
at 1. See 16 U.S.C. s.1952 (Hobbs Act). 



211 

The Forwarding of the 
DiCarlo-MacKenzie Allegations 
to the Boston Office of the 
Federal Bureau of Investigation 

Federal authorities in Philadelphia did not forward the October 1974 

DiCarlo-MacKenzie information from McKee until February 1975, after McKee had 

1 9 
completed his testimony to the federal grand jury in Philadelphia. * The 

Philadelphia FBI did not send the information directly to the Boston FBI office. 

Instead, it referred the information to the New York FBI office, commenting 

that -- 

"No leads are being se[n]t out, and it is being left to 

the discretion of the Office of Origin tc advise Eoston 

recarding this information after it has been verified in New 
York. " 

The "Airtel" from Philadelphia FBI Special Agent Rohr that communicated the 

21 

DiCarlo-MacKenzie story was date-stamped as received by the New York FBI on 

February 10, 1975. It was eventually forwarded to the Boston FEI and 
date-stamped as received there on February 24, 1575. According to Pohr's 

testimony, Rohr had drafted the Airtel within fcur days of the October 28, 1574 

22 

McKee interview. 

The Rohr Airtel contained a version of the DiCarlo-MacKenzie story that is 

sharply different from the testimony that was eventually presented at the 

DiCarlo-MacKenzie trial. The Airtel said, in part: 

"Shortly after becinning work on [the UMass/Boston] 
contract, ... the Presioent of MBM, Mr. GERALD VZ KEE, was 
approached by a Representative of Massachusetts Leoislature, 
Senator MC KENSIE [ s_ic ] . This individual told MC KEE that MBM 
would have to pay $100,000 tc stay on the contract at the 
University of Massachusetts. MC KEE refused to make this 
payment. Shortly thereafter, a Commonwealth of Massachusetts 
hearino into the contract was initiated by Senator JOSEPH 
DICARLO. 



1 ? Rohr testimony, 5/6/78 Hearing on Motion for Production of Witness 
Statement, at 30-31. 



20 FBI Airtel dated February 7, 1575 from Special Aoent in Cheroe ("SAC") of 
the Philadelphia FEI office to the SAC of the New York FBI office, re: N.Y. FEI 
file no. 166-3647. 

21 Id. 

22 Rohr testimony, 5/6/78 Hearinc on Motion for Production of Witness 
Statement, at 25. 



212 



"Toward the end of the hearings, MC KEE received word 
from DI CARLO that the outcome of the hearings could be 
favorable or unfavorable for MBM, depending on what kind of 
money MEM was willino to pay. At this time, MR. DANIEL 
SHIELDS, a Vice-President of MBM , contacted a RUSSELL DOBBS 
[ sic ] , an insurance aoent in Boston, Mass., as well as 
Massachusetts Senator~MC KENSIE. Through MC KENSIE and DOBBS, 
as well as SHIELDS, a deal was arranged whereby MBM would pay 
$40,000 to $50,000 in order to have the hearings come out 
favorable for MEM. A deal to this end was arranged, and the 
Senate hearings concluded by exonerating MBM of any wrongdoing 
in the contract with University of Massachusetts. The 
enclosed Mauchly Construction Manaoement checks reflect 
partial payent of $13,500 to Senators MC KENSIE and DI CARLO 
from MBM. Additional funds were taken from another company 
known as MBM Developers, Inc., and delivered to Massachusetts." 

This account differed so drastically from the trial testimony that it might 

have been a subject for intensive cross-examination by the defense. But it was 

not made available to the defense prior to, or during, the trial. It was made 



available more than a year after the DiCarlo-MacKenzie trial 



23 



The Government 



then took the position that the Airtel would not have been producible under the 

y h 2 5 

Jencks Act, and Judge Skinner, after a hearing, agreed. In addition, the 

United States Attorney's office said that the Boston FEI had not forwarded the 

Airtel to the United States Attorney's Office until August 22, 1578 -- more than 
a year after the trial -- although the Boston FEI agents who had worked en 

the ease with the Boston United States Attorney's Office had seen the Airtel in 



157 



c 27 

McKee, when shown the Rohr Airtel by the Commission, said that he had not 

op 
given that account to Rohr. It is not clear ho* Rohr came up with "Dobbs's" 

(Dodds's) name or why Rohr singled out the MCM checks. 



23 See letter datec August 24, 1576 from United States Attorney Edward F. 
Harrincton (by Assistant United States Attorney Alar C. Rose), to Honorable 
WalterJ. Skinner, re: Defendants' Motion for Production of Witness Statement, 
filed July 20, 1978 in United States v. DiCarlo, Mackenzie . 



2* It 



at 2 



25 Statement of Judge Walter J. Skinner, at 5/6/78 Hearing on Motion for 
Production of Witness Statement, at 48-50. 

26 Harrington (by Rose) 8/24/78 letter to Judge Skinner, at 2. 

27 Representation by Assistant United States Attorney Alan D. Rose, at 5/6/78 
Hearing on Motion for Production of Witness Statement, at 56-55, of what the FEI 
agents were prepared to testify. 

28 McKee 6/18/75 interview at 5; 8/30/75 interview at 3. 



213 

The First Knowledge 

Ey DiCarlo and Mackenzie 

That They Were Eeing Investigated 

In 1578, FEI Special Agent Klaus Rohr said that he had not taken 
contemporaneous notes of McKee's initial statement about DiCarlo and Mackenzie 
because Rohr had considered Massachusetts matters tc be beyond the scope of his 
investigation. ' However, in testimony to the Commission in I960, Ronald 
MacKenzie said that he first learned that there might be a federal investigation 
of himself and DiCarlo when, in late 1974, William Harding called MacKenzie and 
said that he (Harding) had been asked, at the end of Questioning before a 
Philadelphia grand jury, whether he knew two Massachusetts senators named DiCarlo 
and Mackenzie. MacKenzie told the Commission that he told DiCarlo about 
Harding's call, a fact which DiCarlo also recalled. 

DiCarlo and MacKenzie apparently did not become seriously concerned about a 

federal investigation of their 1971-72 activities regarding MEM until they 

32 

learned that the Boston FEI was actively investigating the matter.'' DiCarlc 

testified to the Commission that he learned of the Boston FEI investigation in 
the late spring or early summer of 1975. According to DiCarlo, he was called out 
of a meeting at the reouest of Senate President Kevin E. Harrington, who told 
DiCarlo that DiCarlo was the subject of a federal investigation.""^ DiCarlc 
testified that Harrington said he had learned this information from Thomas M. 
Joyce, a lobbyist. DiCarlo did not testify about how Joyce may have learned of 
the federal investigation. 

DiCarlo testified that after receiving the initial news from Harrington, 
DiCarlo and Harrington met with Joyce to discuss the matter further. DiCarlc 
decided to accept their aovice and utilize the services of attorney Walter J. 



29 Rohr testimony, 9/6/76 Hearing on Motion for Production of Witness 
Statement, at 25. 

30 MacKenzie testimony, Sp. Comm. 6/4/80 at 3. 

33 lo. at 4; DiCarlo testimony, Sp. Comm. 6/3/80 at 8-9. 

32 MacKenzie testimony, Sp . Comm. 6/3/80 st 4 ; DiCarlc testimony, Sp. Comm 
6/3/80 at 4-7. 

33 DiCarlo testimony, Sp. Comm. 6/3/80 at 4-6; notes of 12/8/78 interview of 
Joseph J. C. DiCarlo by Special Commission staff, at 13; DiCarlo 4/26/79 
interview at 17. 



214 



34 



Hurley, M Joyce's law partner. DiCarlo and Mackenzie thereafter met to discuss 

the situation and, upon the advice of Hurley and Harrington (according to 

DiCarlo), DiCarlo persuaded Mackenzie to retain attorney Robert V. Mulkern 

instead of the attorney whom Mackenzie initially planned to engage.'' 

Although DiCarlo and Mackenzie were not identified by name, a newspaper 

article 36 on June 12, 1975 spread the word that -- 

"[t]wo prominent Massachusetts politicians are reportedly 
under investigation by the Federal Bureau of Investigation for 
allegedly accepting a bribe from a New York construction 
management firm in connection with the construction of the 
University of Massachusetts Boston campus. 

"According to knowledgeable sources, attorneys for Mckee, 
Berger & Mansueto (MBM) have told the FBI that company 
officials paid the politicians to whitewash a legislative 
investigation of a contract they had with the state." 

This Boston Globe news story by David Farrell appeared eleven days before Mckee 

and Mansueto had their first interviews with the Boston FBI (or, at least, before 

the date of the first available Boston FBI interview reports regarding Mckee and 

Mansueto) . 

Events Leading tc the 
DiCarlo-Mackenzie Indictments 

For the balance of 1975, DiCarlo remained concerned and met frecuently with 

Harrington, Joyce, anc Hurley. The FBI, in the meantime, was having 

difficulty putting together a prosecutable case. The case essentially had come 

down to a "one-on-one" contest, so far as DiCarlo was concerned: The only 

testimony linking DiCarlo directly to MBM money was Mckee's account of DiCarlo's 

somewhat oblique statements at the Gaslight Club in New York in 1972. If 

DiCarlo, as expected, were to testify ana deny Mckee's account, a conviction 

woulc be something less than a certainty. The FEI tried to get Daniel Shields to 

corroborate Mckee's testimony, but Shields would not cooperate. 



34 DiCarlo 4/26/79 interview at 17. 

35 DiCarlo testimony, Sp. Comm. 6/3/80 at 17-19; Mackenzie testimony, 6/4/8C 
at 4-5. 

26 David Farrell, "2 Investiaated in Whitewash of UMass Probe," Boston Globe, 
June 12, 1975. 

27 See report dated 6/27/75 of interviews of Gerald P. [ sic ] Mckee, Jr. and 
Anthony [E.] Mansueto conducted by FEI Special Agent Fcbert E. Sheehan or 6/23/75 

3£ DiCarlo testimony, Sp. Comm. 6/3/80 at 10-14. 

39 Shielos 8/16/75 interview at 8; DiCarlc 4/26/79 interview at 3. 



215 

By the beginning of 1976, thus, there did not appear to be a prosecutable 
case, and DiCarlo and Mackenzie have both testified that they were relieved to 
learn of that fact from Harrington and/or Joyce. In interviews with 
Commission staff, Harrington and Joyce denied that they had any source of "inside 
information" in the FEI, the United States Attorney's Office, or the Justice 
Department. 

Later in 1976, the status of the case changed. Shields came to agree with 
McKee that DiCarlo had come to New York in 1972, gone to the Gaslight Club, and 
made statements reflecting annoyance that MEM had been late in meeting monetary 
commitments. 

Armed with this corroboration from Shields, the United States Attorney's 
Office sought and obtained indictments of DiCarlo and Mackenzie for violations of 
the Hobbs Act and other related crimes. ^ The indictments were returned on 
August 12, 1976. 

The indictments mentioned a "John Doe" -- later identified to be State Senate 
Ways & Means Committee Chairman James A. kelly, Jr. -- as an unindicted 

4 c 
co-conspirator. That apparently did net come as a complete surprise to 

kelly, since he allegedly told DiCarlo in advance about the forthcoming 



indictments . 



he 



40 DiCarlo testimony, Sp. Comm. 6/3/80 at 11, 13; Mackenzie testimony, Sp. 
Comm. 6/4/80 at 5-6. 

41 Notes of 4/24/79 interview of Thomas Joyce by Special Commission staff, at 
7; interview of kevin E. Harrington by Special Commission staff. 

42 Shielos testimony 15 DiC 2/14/77 at e9-94, 141-144, 153-156. 

43 indictment, United States v. Joseph J.C. DiCarlo and Ronald C. Mackenzie , 
Cr. no. 76-339-S (D. Mass. August 12, 1976) for violation of 16 U.S.C. s.1951 
(Hobbs Act), conspiracy to commit extortion and extortion; violation of 18 U.S.C 
s.371, conspiracy to violate the Travel Act; and violation of 18 U. S . C . ss . 1952 
and 2, interstate travel to aid in unlawful activity. 

44 Opening statement by Assistant United States Attorney Edward J. Lee, 
reproduced'at 25 DiC 1/25/77 at 3. 

45 Indictment, United States v. DiCarlo, Mackenzie , at 4, 9. 

46 DiCarlc testimony, Sp. Comm. 6/3/8C at 21. 



216 



The DiCarlo-Mackenzie Trial 



The DiCarlo-Mackenzie trial before Federal District Judge Walter J. Skinner 
and a jury began on January 25, 1977 and lasted for 21 trial days. The major 
witnesses were MBM President Mckee (who testified for five days); MEM 
Vice Presidents Hansueto (two days), Thomas (two days), and Shields (one day); MBM 
salesman Harding (two days); and attorney Endicott Peabody (two days). 

McKee, Thomas, and Harding all testified about delivering envelopes 
containing cash to Mackenzie. Financial records and testimony showed how MEM 
generated cash on the relevant dates. Harding and McKee testified that 
Mackenzie was given the cash because Mackenzie had said that it was DiCarlo's 
price for issuing a legislative investigative report that would not harm 
MBM.^ 5 The MBM witnesses testified that $40,000 was given to Mackenzie in that 
connection . 50 

The evidence presented against DiCarlo was considerably less compelling. 
There were no witnesses who testified about giving money directly to DiCarlo. 
Nor dia any witnesses testify about conversations directly with DiCarlo in which 
DiCarlo demanded or agreed to accept any money. No one even testified about 
discussions directly with DiCarlo about altering the legislative report. 



47 Mckee testimony, 5 DiC 1/31/77 at 56-83; Thomas testimony, 11 DiC 2/8/77 
at 70; Harding testimony, 12E DiC 2/9/77 at 23-24, 39-40, 46-48. 

48 Testimony of former MBM accountant Sylvester Novelline, 13 DiC 2/10/77 at 
100-125; testimony of former MBM comptroller Andrew Serell, 13 DiC 2/10/77 
145-171; various exhibits. 

49 Hardinc testimony, 12B DiC 2/9/77 at 21; 13 DiC 2/10/77 at 3, 23; McKee 
testimony , "4 DiC 1/27/77 at 74, 79. 

50 s e e McKee testimony, 4 DiC 1/27/77 at 80-114; 5 DiC 1/31/77 at 8-83, 86. 



217 

Essentially the only testimony that linked DiCarlo to the case was (1) the 
testimony of McKee and Peabody about a meeting at DiCarlo's house in February 
1971; (2) testimony by Mansueto about a meeting with State Senator James A. 
Kelly, Jr. in Florida on March 17, 1971; and (3) testimony by McKee and Shields 
about a trip that DiCarlo made to New York in 1972. 

As to the February 1971 meeting, McKee and Peabody testified that they went 
to DiCarlo's house to try to avert a legislative investigation of MBM's 
UMass/Boston contract or, at least, to assure MBM a fair hearing. They 
testified that DiCarlo was harsh and unsympathetic, expressing an intention to 
use the projected investigation to hurt Lieutenant Governor Donald R. Dwight > who 

had awarded the contract to MBM and whom, according to McKee and Peabody, DiCarlo 

52 
said he regarded as a political rival. 

Mansueto testified that he met with Senator Kelly in West Palm Beach, Florida 

on March 17, 1971, and that Kelly said that DiCarlo would not hurt MBM if DiCarlo 



were given $10C,000 



53 



DiCarlo was not alleoed to have been present 



Finally, McKee and Shields testified that DiCarlo came to New York (with 

MacKenzie) on July 6, 1972 -- two months after MBM had completed the final 

c 4 
installment on the $40,000 of payments to buy off DiCarlo.'' They testified 

that DiCarlo complained that MBM had been slow in making payments and that if MBM 

55 
wanted DiCarlo's help in the future, MEM would have to be more prompt."^ 



51 McKee testimony, 3 DiC 1/26/77 at 126-134; 6 DiC 2/1/77 at 136-159. Peabody 
testimony 7 DiC 2/2/77 at 171-162; 8 DiC 2/3/77 at 79-82, 88. 

52 Mckee testimony, 3 DiC 1/26/77 at 132; Peabody testimony, 7 DiC 2/2/77 at 
175-177. 

53 Mansuetc testimony, 9 DiC 2/4/77 at 43-50. 

54 McKee testimony, 5 DiC 1/31/77 at 73-78, 83-86; Shields testimony, 15 DiC 
2/14/77 at 87-93. 

55 McKee testimony, 5 DiC 1/31/77 at 76, 83-85; Shields testimony, 15 DiC 
2/14/77 at 93. 



218 

These three types of testimony against DiCarlo were even more attenuated than 
they appear here, since Judge Skinner instructed the jury that the first two 
types of testimony could not be considered for their truth, but only to determine 
whether Mckee had reason to be in an extortion-induced fearful state of mind when 
he authorized the alleged cash payments for DiCarlo. ° As to the alleged July 
6, 1972 meeting in New York, the defense presented witnesses in an attempt to 
persuade the jury that DiCarlo and Mackenzie could not have been in New York at 
the time that Mckee and Shields had testified. 

The government did not present evidence of dramatic changes in the 
DiCarlo-Sirianni Committee report about MBM. The government attempted to show 
that a page of self-serving statements drafted by McKee was added to the report, 
but the government did not mention any damaging language in an earlier draft that 

CO 

was removed on account of payments for DiCarlo. 

DiCarlo and Mackenzie elected not to testify in their own defense. Mackenzie 
has indicated to the Commission that if he had testified at the DiCarl o-MacKenzie 
trial, he would have admitted helping MBM in various ways and accepting small 
contributions at various times from MBM -- but he would have denied receiving 

c c 

$40,000 or having participated in an extortion of MBM. DiCarlo's trial lawyer 
has told Commission staff (pursuant to a waiver of attorney-client privilege by 
DiCarlo) that he believed that Mackenzie's intended testimony at the 
DiCarlo-Mackenzie trial would have resulted in both defendants being convicted, 
and that DiCarlo had to agree not to testify if Mackenzie were to agree not 



56 Instructions by the Court, 4 DiC 1/27/77 at 47-46, 76-77; 13 DiC 2/J4/75 at 
43; 17 DiC 2/16/77 at 162-164. 

Testimony of former Massachusetts Senate parliamentarian Norman L. Pidceon, 
15 DiC 2/18/77 at 26-46; testimony of former State Senator John J. Conte, 21 DiC 
2/23/77 at 45 ff; testimony of former New York City taxi driver Lloyd Georoe 
Murray, 21 DiC 2/23/77 at 10 ff. 

58 After the government completed its case in chief, a defense witness, 
Frederick kussman, presented what he said was an earlier draft of the report. 
See 20 DiC 2/22/77 at 135-145. The government, which had not seen that draft 
prior to the trial, did not emphasize the language in that draft which could have 
been harmful to MBM. 

55 Mackenzie interview. 

60 Release and waiver of attorney-client privilege dated April 12, 1575, 
executed by Joseph J.C. DiCarlo, and directed to attorneys Walter J. Hurley and 
Thomas M. Joyce. 



219 



61 



to testify. DiCarlo's decision not to testify was, according to attorney 
Hurley, completely voluntary on DiCarlo's part and made with considerable relief 
by DiCarlo. 62 

Although the defense placed great emphasis on evidence tending to show that a 
Gaslight Club meeting in New York could not have occurred on July 6, 1972, 
the judge's charge to the jury did not clearly preclude the defendants from being 
found guilty if the jury concluded that a meeting of the type described took 
place on some other date. Moreover, the judge instructed the jury that it 
did not have to find a classic extortion -- i.e. , Mckee having been put in fear 
by DiCarlo -- in order to find DiCarlo and Mackenzie guilty of Hobbs Act 
violations. The judge explained that the word "extortion" as used in the Hobbs 
Act is a term of art which is defined by the statute to include not only a 
classic extortion but also a public official's acceptance of money to which the 
official is not legally entitled, with the payments occurring in connection with 



the official's use of his public office. 



65 



The jury found DiCarlo and Mackenzie guilty on all eight counts on which each 
had been indicted. DiCarlo and Mackenzie each received a sentence cf one 
year in prison and a $5,00C fine. Mackenzie resigned from the State Senate 
following his conviction, end DiCarlo -- who reportedly "said that 2,000 years 



61 Hurley 4/24/79 interview at 5-6. 

62 DiCarlc has told Commission staff that he was eaoer to testify. DiCarlo 
12/8/76 interview at 12. 

63 See Final Arguments of Defense Counsel, DiC 2724/77 at 36-43. 
6h Charge to the jury, 23 DiC 2/24/77 at 78-60. 

65 Id. at 65-77. See 18 U.S.C. s . 1951 (b ) ( 2 ) . 

66 See docket sheets, United States v. DiCarlo, Mackenzie Cr. no. 76-339-1, 
2-S. 

67 Judgment and Commitment Order, United States v. DiCarlo , Cr. no. 76-339-S 
(D. Mass., 1977), filed March 29, 1977 ; Judament and Commitment Order, United 
States v. Mackenzie , Cr. no. 76-339-S (D. Mass., 1977), filed March 29, 1977. 



220 



CD 

ago another innocent man was wrongfully convicted" -- was expelled aft 



er 



69 



refusing to resign from the State Senate 

Post-Trial Proceedings 

And Allegations 

Although the DiCarlo-MacKenzie trial generated considerable publicity, it was 
nothing compared to what resulted from post-trial proceedings and allegations 
initiated by the convicted state senators. During the trial, the only 
politicians whose names were mentioned prominently were DiCarlo, MacKenzie, and 
unindicted co-conspirator Kelly. After the trial, however, the names of Senate 
President Kevin Harrington, Eoston Mayor Kevin White, and former Governor Francis 
Sargent became linked, directly or indirectly, with MEM. Some of the major 
allegations are considered in this section of the Commission's Report. 

Senators DiCarlo and MecKenzie were found guilty by the federal jury on 
February 25, 1977. p The convictions were appealed, primarily upon the 
argument that DiCarlc's actions in connection with the DiCarlo-Sirianni 
legislative investigative committee were not prosecutable by virtue of 
"legislative privilege." The panel of the United States Court of Appeals for 
the First Circuit unanimously rejected the "privilege" argument and affirmed the 

79 

Di Carlo-MacKenzie convictions with an opinion issued on November 11, 1911. 

Even before their direct appeal had been denied, DiCarlo and MacKenzie 
jointly filed a new trial motion. 7 - 5 The motion, filed on November 9, 1977 
before the trial judge (Judge Skinner), was accompanied by affidavits containing, 



66 



David Farrell, "The Sad Case of Joe DiCarlo," Eoston Globe, April 13, 1980. 



£5 is. DiCarlo resigned as Senate Majority Leader on February 26, 1977. 
MacKenzie resigned from the Senate on March 31, 1577. Journal of the Senate, 
1577, I, at 337. DiCarlo was expelled from the Senate on April 4, 1977. Journal 
of the Senate, 1977, I, at 347. 

7C See docket sheets, United States v. DiCarlo, MacKenzie , Cr. no. 76-339-1, 
2-S. 

71 Defendants' Appeal from Conviction, United States v. DiCarlo, Mackenzie , 
nos. 77-1165, 77-1166. 

72 United State v. DiCarlo, MacKenzie , 565 F . 2d 802 (1st Cir. 1977). The 
United State Supreme Court denied certiorari on March 20, 1978, as reported 
at 435 U.S. 924 (1978) . 

Defendants' Motion for a New Trial, United States v. DiCarlo, Mackenzie , 
Cr. nos. 76-339-1, 2-S (D. Mass. November 9, 1577). 



221 



Ik 



among other things, allegations relating to Harrington and Sargent.' The 
papers were impounded by the court. 

On December 23, 1977 the impoundment order was lifted and the motion papers, 
including the affidavits, thereafter were made public. 7 ° The motion was filed 
for DiCarlo and Mackenzie by their new attorneys, Francis J. DiMento and Earle C. 
Cooley. The motion charged that DiCarlo's and Mackenzie's trial lawyers had had 
conflicts of interest, resulting in inadequate defenses being presented for 



DiCarlo and Mackenzie 



77 



78 



Specifically, the motion said, in part: 

"The conflict of interests and inadeauate defense appear from 
the following facts: 

"Attorney Walter J. Hurley, trial counsel for the 
defendant DiCarlo, was and is employed by, or associated in 
the practice of law with, Attorney Thomas M. Joyce. Mr. Joyce 
was and is the attorney, political advisor and close friend 
and associate of former Governor Francis W. Sargent and Senate 
President kevin E. Harrington. 

"At the insistence cf Messrs. Hurley and Joyce, the 
defendant Mackenzie was persuaded not to retain Attorney Earle 
C. Cooley as trial counsel, but to retain instead Attorney 
Robert V. Mulkern, who would follow the leadership of Mr. 
Hurley and Mr. Joyce. 

"During the course of the trial, evidence developed which 
indicated that MBM, the alleged victim cf the crimes charged 
to the defendants, had made cash payments to Senate President 
Harrington and, through Albert P. Manzi and/or William V. 
Masiello, to former Governor Sargent (a) after the award cf 
Phase I of the contract to MBM, (b) during MEM's performance 
of Phase I, (c) during a period when MBM sought and obtained 
contract modifications and (d) prior to the award of Phase II 
of the contract, which MBM was actively seeking. 



7Z) The new trial motion referred specifically to an impounded lobby conference 
in which a June 26, 1975 FEI interview of Jack Thomas was presented. Thomas had 
revealed an MBM payment of $2,00C to kevin Harrington in October 1970, and MBM 
payments of $10,000 in October 1970 and $10,000 in May 1972 to Albert Manzi, a 
fundraiser for Governor Sargent. 6 DiC 2/1/77 at 29-49. See also affidavit 
dated November k, 1977 executed by William R. DiMento, Exhibit G to the New Trial 
Motion . 

75 Motion for Impoundment, United States v. DiCarlo, Mackenzie nos. 77-1165, 
77-1166 (1st Cir. November 9, 1977). 

76 See docket sheets, Unitec States v. DiCarlo , no. 76-339-1-S; docket sheets, 
Unitec States v. Mackenzie , no. 76-339-2-S. The allegations contained in the 
metier, papers were made in a hearing on the motion in open court en December 23, 
1977. The motion papers were apparently net made public until December 2S , 
1977. See article by Robert J. Rosenthal, Eoston Globe, December 30, 1977 at 1. 



77 
2. 

76 



Defendants' Motion for a New Trial, United States 



CiCarle , Mackenzie , at 



Id. at 



Citations and outline captions omitted. 



222 

"It therefore became immediately apparent, especially in 
view of all the other circumstances and evidence in the case, 
that defense counsel, in order to properly and effectively 
advance their political contribution-defense, should develop 
evidence not merely that MBM was the willing victim of the 
defendants 1 alleged extortionate scheme but that MBM had, in 
fact, corruptly purchased the award of Phase I of the 
contract, protection during its performance and the reasonable 
likelihood of an award of Phase II, by payments to Harrington 
and to Sargent through Manzi and Masiello; and that any 
alleged payments to or in behalf of the defendants were 
political contributions that could not have been induced by 
fear or under color of official rights, since MBM knew that 
its interests in the UMass. project were already fully secured 
by the payments previously made to Sargent and Harrington. 

"In spite of the trial court's expressed willingness to 
permit such evidence and trial counsels' assurances to the 
defendants that such evidence would be used, trial counsel did 
not in fact exploit the evidence, but instead merely elicited 
from MBM's officers and employees that political contributions 
had been made to unidentified recipients in Massachusetts 
during the years 1970 and 1972...." 

Eeyond the allegations that MBM had made cash payments to Harrington and 

Sargent, the new trial motion further alleged that DiCarlo's and MacKenzie's 

trial lawyers had "failed and refused" to offer "[e]vidence that Attorney 

Endicctt Peabody was not at the Revere home of defendant DiCarlo on Thursday, 

February 18, 1971, in the company of Gerald A. [ sic ] McKee, as alleged, but 

rather visited the DiCarlo home alone on Sunday, February 21, 1971." In essence, 

this aspect of the DiCarlo-MacKenzie post-trial motion was accusing former 

Governor Peabody ano MBM President McKee of perjury, since each one's testimony 

had prominently included mention of the other's being oresent at DiCarlo's home at 

the February 1971 meeting. * The testimony of the meeting was allowed by Judge 

on 

Skinner only on the issue of McKee's state of mind cu -- yet the new trial 
motion was saying that McKee had not even been at the meeting. 
The new trial motion further alleoed that -- 



"During the course of the investigation of this case and 
prior to trial, it was brought to the attention of defense 
counsel that William V. Masiello, if called as a witness on 
behalf of the defendants, would testify that, in August of 
1971, Anthony Mansueto, a principal of MBM and a government 
witness at the trial, told Masiello that he, Mansueto, had 
just paid $120,000 in cash to former Governor Endicott 



79 See e.c. , McKee testimony, 3 DiC 1/26/77 at 126-134; 6 DiC 2/1/77 at 
138-140, 145-146, 152; Peabody testimony, 7 DiC 2/2/77 at 171-181; 8 DiC 2/3/77 
at 79-80. 

6C See 3 DiC 1/26/77 at 125. 



223 

Peabody, who was also a witness for the government at the 
trial . 

"If called by the defendants, Masiello would have further 
testified that he received a draft copy of the 
[DiCarlo-Sirianni ] Committee report from its author, Frederick 
Kussman, delivered the original to the defendant DiCarlo and 
covertly delivered a copy to Mansueto; and that the delivery 
to Mansueto occurred in September, 1971, notwithstanding 
testimony of Gerald McKee that he first received a draft copy 
of the report on October 14, 1971, from the defendant 
Mackenzie . 

"Although the foregoing information was brought to the 
attention of both defense counsel, Masiello was not timely 
called as a witness by either defense counsel. ... When 
defense counsel argued to the court the unavailability of 
Masiello, the trial court and the prosecutor both offered to 
use the resources of the government to obtain Masiello's 
appearance at the trial as a witness for the defense. Defense 
counsel, however, did not accept the offer of assistance. ..." 

The new trial motion contained additional allegations, as well. 

Before discussing the disposition of the DiCarlo-MacKenzie new trial motion, 

it may be useful to consider briefly the substance of the allegations that were 

contained in the motion. As to alleged MBM payments to Harrington and tc 

Manzi/Masiello for Sargent, those are discussed in Appendix F to this Final 

Report. The only alleged payment to Harrington was, as discussed, made by check, 



not in cash 



£1 



The charge that Peabccy went alone to DiCarlo's house has been 



reviewed in Chapter VII. As discussed, there is evidence tending to support 

Peabody's and McKee's testimony that McKee was present along with Peabody, and 

the Commission is not aware of any evidence, other than DiCarlo's testimony, that 

p i 

McKee did not atteno the February 1971 meeting. The Commission makes no 

credibility determination. 

As to the "$120,000 allegation" involving Peabody, the Commission 



e l See discussion in Appendix F to this Final Report. 

62 See discussion in Chapter VII supra . 

e - DiCarlo testimony, Sp. Comm. 4/7/6C at 29. DiCarlo told the Commission 
that members of his immediate family would have agreed with his testimony. 
DiCarlo 12/6/76 interview at 4. DiCarlo also presented the Commission with 
evidence tending to show that Peabody's description of DiCarlo's house described 
the house net as it was in 1971, but as it was after remodeling in 1974. Such 
evidence is of little or no value in determining whether McKee was present in 
February 1971 (although DiCarlo argued that it reflected Peabody's lack of 
credibility in general). DiCarlo has admitted that Peabody, at least, was at 
DiCarlo's house'in February 1971. DiCarlo testimony, Sp. Comm. 4/7/6C at 29. 



224 
investigated that matter intensively, including successfully litigating in the 
Massachusetts Supreme Judicial Court the guestion of whether Peabody could be 
compelled to produce all of his records related to MBM Massachusetts 
activities. The Commission spent months reviewing all available MEM 
financial records and correspondence, and the Commission conducted numerous 
interviews related to that allegation. The Commission found nc evidence to 
support the allegation that Peabody was given $120,000 or any other amount in 
cash in 1971 or at any other time by MEM. Moreover, William Masiello denied, in 
testimony before the Commission, that he had heard such a thing from Mansueto or 
told such a thing to the DiCarlo investigator who filed the only affidavit on the 

p c 

subject in connection with the DiCarlo-MacKenzie new trial motion. 

As to Masiello's alleged unavailability to the defense during the 



DiCarlo-MacKenzie trial, Judge Skinner offered to ask the FBI to try to locate 

86 

Masiello for the defense, and the defense counsel demurred. In 1980 Masiello 

acknowleoged , in testimony to the Commission, that he had "duck[ed] a subpoena" 
to testify at the DiCarlo-MacKenzie trial. Masiello did not explain why he 
ducked the subpoena, but he testified that shortly after the DiCarlo-MacKenzie 
trial concluded he was offered $50,000 in cash by State Senator James A. Kelly, 
Jr. and Worcester Civic Center Commissioner Peter Consiclio to move out of 



£4 Ward v. Peabody , Supreme Judicial Court S-2072. In litigating the matter 
before the Commission and in the courts, Commission counsel was reouired to set 
forth the allegations under investigation to which the documents cculd possibly 
be relevant. Commission counsel clearly and properly identified the allegations 
ss allegations. See , e . g , , Sp. Comm. 11/9/79 at 54; transcript of oral argument 
in Ward'v. Peabody 12/4/79 at 2C-21. 

85 William Masiello testimony, Sp. Comm. 6/24/80 at 44-46. When Endicctt 
Peabody appeared before the Commission, he asked the Commission to "clear" him, 
then and there, of the $120,000 allegation. Opening statement by Endicctt 
Peabody, Peabody testimony, Sp. Comm. 6/18/80 at 4-10. The Commission could not 
do so because it had not concluded its investigation of the matter and, in 
particular, was awaiting testimony from Mansueto. Mansuetc was scheduled tc 
testify before the Commission on June 25, 1980; he declined to appear. See Sp. 
Comm. 6/27/6C at 4-5. The Commission, moreover, is not in a position to "clear" 
someone on an issue of this nature. As stated in the text, the Commission found 
no evidence to support the $120,000 allegation. 

£ £ See bench conference, 20 DiC 2/22/77 at 102-105. 

87 William Masiello testimony, Sp. Comm. 5/13/80 at 98. 



225 
Massachusetts so that he would not be amenable to subpoenas. 



88 



The DiCarlo-MacKenzie motion for a new trial was denied by District Judge 

Skinner on January 17, 1978. es Judge Skinner, who rejected DiCarlo's and 

MacKenzie's reouest for an evidentiary hearing on the motion, 50 took -- 

"judicial notice of the fact that [the DiCarlo-MacKenzie trial 
lawyers] Hurley and Mulkern are attorneys of good reputation; 
that Hurley in particular is a specialist in the defense of 
criminal cases in both state and federal courts, and has had 
particular experience in cases charging public officials with 
corrupt acts, including Hobbs Act cases; and that Hurley and 
Mulkern have previously worked as co-counsel in the defense of 
criminal cases.... These matters were called tc the attention 
of present defense counsel [DiMento and Cooley], who agreed as 
to the accuracy of the above. 



"Defense counsel [Hurley and Mulkern] statea [in bench 
conferences during the trial] that they considered the 
ouestion of MBM's [alleged political contribution] activities 
important but that the names [of the alleged recipients] 
weren't important. The Assistant United States Attorney made 
it clear that if the matter were pursued, it was likely that 
the names of the alleged payees would be brought out 'in order 
to make the record clear from the government's point of 
view . ' ... 

"Thereafter defense counsel pressed the ouestion of MBM's 
political contributions at every stage of the 
cross-examination of MBM's witnesses, at great length and in 
great detail. At any point, the names of Harrington and Manzi 
could have come out through the witnesses or on redirect 
examination . 

"... Present counsel say that it was also incumbent en [trial] 
counsel tc bring out the names of Harrington, Sargent, Kelley 
[ sic ] and White as recipients of payments. The defendants' 
directions [to their trial counsel] were not so explicit. I 
find that reasonable attorneys could differ with present 
counsel as to the unmixed blessings which would accrue to the 
defendants if they themselves attempted to involve other 
well-known political figures in the case.... 

"Defendants also say that trial counsel should have made 
greater attempts tc find the ubicuitous Masiello and put him 
on the stand. In my vie* , given that Masiello was trying to 
avoid testimony, and would be reluctant and possibly hostile, 
... prudent counsel might well consider that to expose him to 
cross-examination by the United States Attorney would be 
foolhardy .... 



88 Id. at 96-100 



and Order on Motion for a 
Mass., January 17, 1978). 



New Trial, United States v. DiCarlo 



85 Memorandum 
Mackenzie , ( D . 

50 The reouest was made and argued at pages 2 through 5 of Defendants' 
Memorandum (filed December 22, 1977) in Support of Motion for New Trial. Judge 
Skinner noteo the denial at pace 3 and pages 6-7 of his Memorandum and Order or 
Motion for a New Trial (January 17, 1978)7 



226 



"...It was my observation that the defense [at trial] was 
conducted by counsel with ingenuity and vigor. Every 
reasonable motion was presented and objection taken. 
Interrogation and argument were forceful, thorough and skilled. 

"Upon a complete review of the record, I am satisfied 
that the defendants were well represented [at trial] by able 
and loyal counsel." 

Judge Skinner rejected the other arguments raised by DiCarlo and MacKenzie in the 

new trial motion. Judge Skinner neither discussed ncr (as previously mentioned) 

held an evidentiary hearing about the $120,000 allegation involving Peabody. 

Judge Skinner also denied DiCarlo's and Mackenzie's motion for bail and stay of 



execution, and he ordered them surrendered for imprisonment forthwith. 



91 



DiCarlo and MacKenzie began serving their prison sentences on the following 

c 2 
day. They sought a stay of execution of the sentence, and their motion for 

stay was unanimously denied by the panel of United States Court of Appeals for 

the First Circuit on January 26, 1978 (with an unpublished opinion). ^ 

DiCarlo and MacKenzie appealed the denial of their new trial motion, and the 

panel of the United States Court of Appeals for the First Circuit unanimously 

9 h 

affirmed the judgment by Judge Skinner.'' The appeals court, in its 

opinion,-"' noted that -- 

"Defendants [DiCarlo and MacKenzie] selected Hurley 
precisely because Joyce had political connections. Such 
connections are not simplistic, but extend in many 
directions. The least defendants could expect was the 
possibility of some interface. The least that, in turn, could 
be expected of defendants would be to make their own decisions 
when some such matters surfaced. Defendants were in no 
respect naive or unsophisticated. Nothing was concealed from 
them, including the fact that day after day the trial was 
proceeding without their counsel disclosing the names to the 
jury. They do not excite our sympathy when, having lost their 
case, they malign their counsel, and say they were put upon. 
Defendants have failed to allege or establish a real conflict 
of interest or any actual prejudice." 



51 Memorandum and Order on Motion for a New Trial, United States V. DiCarlo, 
Mackenzie (D. Mass. January 17, 1978) at 12. 

92 See Alan Sheehan article, Boston Globe, January 18, 1978, at 1. 



93 Memorandum and Order, United States v. DiCarlo, MacKenzie , no. 77-1165, 
77-1166, 78-1026 (1st Cir. January 24 , 1978). 



54 United States 



DiCarlo, MacKenzie , 575 F.2d 952 (1st Cir. 1978) 



95 id. at 557-58, 



227 

The appeals court rejected in a footnote DiCarlo's and MacKenzie's argument 

about the failure to procure Masiello to testify at their trial: 

"Defendants also complain of their counsels' failure to 
'accept the government's offer to locate one William Masiello 
and secure his presence at the trial.... Quite apart from the 
fact that Masiellc's purported testimony was supplied only by 
a hearsay affidavit, the court found that he would have been a 
dangerous witness ('foolhardy') for the defendants to call. 
We agree with the court that the failure to call Masiello in 
no way prejudiced the defendants." 

The First Circuit also found no merit in the other arguments that DiCarlo and 

MacKenzie had advanced in their new trial motion. No mention was made of the 

$120,000 allegation. 

DiCarlo and MacKenzie sought review, by the Supreme Court of the United 

c 7 

States, of the First Circuit's judgment regarding the new trial motion.' Such 
review was denied en October 2, 1978. ° 

Although DiCarlo's and MacKenzie's direct appeal and new trial motion met 
with no legal success, they generated an avalanche of press coverage and demands 
for investigations. There also were allegations in the press in January and 
February 1978 to the effect that the legislature's Joint Legislative Committee on 
Post Audit and Oversight had abruptly terminated an investigation of MBM's 
UMass/Boston contract in 1973 as a result of pressure from Endicott 
Peabcdy. GD Those allegations led to the formation of a subcommittee rf the 
Post Audit and Oversight Committee to investigate that Question and related 
matters. 101 Chaired by Rep. Gerald M. Cohen (D-Andover), the Post Audit 
Subcommittee held 24 days of hearings (some private) and attracted considerable 
press coverage. In the meantime, independent investigations relating to MBM were 



56 _Id . at 956, n . 3 (citations omitted). 

97 Petition for Writ cf Certiorari, DiCarlo, MacKenzie v. Unitec States , no 
77-1797, filed June 19, 1978. 

9£ Notification of denial of certiorari by United States Supreme Court, 
October 2, 1978, DiCarlo, MacKenzie v. United States , no. 77-1797. 



95 



See , e.g. Boston Globe articles daily from December 23, 1977. 



l° u See article by Robert J. Rosenthal and Robert L. Turner, Boston Globe, 
January 19, 1978, at 1; excerpts of the report by Post Audit Eureau auditor 
Joseph A. Davey published in Boston Sunday Globe, January 22, 1578; Robert J 
Rosenthal article, Boston Globe, February 3, 1978. 

101 p. A. Report at 1 - A . See also article by Robert J. Rosenthal, Boston 
Globe, February 1, 1978, a FT. 



228 

being conducted by the State Attorney General, the State Auditor, and the 

Governor's Legal Counsel. 102 In April of 1978, legislation was enacted 

establishing the present Commission to conduct a comprehensive investigation of 

matters related to MEM, with the Commission being given discretionary 

jurisdiction to investigate other matters as well. 

Attempts to Induce Mackenzie 
Not to Implicate DiCarlo 

In testimony before the Commission, Ronald Mackenzie stated that on three 

occasions -- first, before the DiCarlo-MacKenzie trial; secondly, after the trial 

and convictions, in connection with a new-trial motion; and, thirdly, shortly 

before Mackenzie was to testify before this Commission -- Joseph DiCarlo 

attempted to induce Mackenzie to commit perjury in regard to accepting cash from 

MBM and/or sharing MBM cash with DiCarlo. Further, Mackenzie testified that 

DiCarlo offered inducements -- ranging from cash for Mackenzie to a job for 

Mackenzie's wife if Mackenzie were convicted -- to try to persuade Mackenzie to 

commit such perjury. Mackenzie's testimony on these matters, except that 

concerning the offer of a cash inducement, was corroborated in large part by 

DiCarlo in testimony tc the Commission. The testimony regarding each of the 

three occasions will be considered in turn. 



The First Occasion . According to both DiCarlo and Mackenzie, there was a 
private meeting of DiCarlo and Mackenzie shortly after the indictments were 
handed down by the federal grand jury in 1976. DiCarlo and Mackenzie agree 
that the discussion included the observations that the indictment contained no 
allegation that anyone frorr MEM had given money directly tc DiCarlo -- and 



1C2 The Attorney General's investigation was announced January 5, 1978. See 
article by Robert L. Turner and Robert J. Rosenthal, Eoston Globe, January 6, 
1578 at 1. The State Auditor's investigation apparently began on January 23, 
1978. See Robert J. Rosenthal article /Boston Globe, January 23, 1978 at 5. The 
investigation by the Governor's chief counsel Max Volterra began on January 20, 
1976, according to Volterra, ouoted in an article by Robert J. Rosenthal, Boston 
Globe, January~24, 1978 at 3. 

1G3 Commonwealth of Massachusetts, Resolves, c.5 (1978). 

104 Mackenzie testimony, Sp. Comm. 6/4/80 at 7-8. DiCarlo testimony, Sp. 
Comm. 6/3/80 at 38. 



229 

that the only theory reflected by the indictment as to how money could have gone 
from MBM to DiCarlo was through the intermediation of Mackenzie (who was charged 
in the indictment with having received cash for DiCarlo from MBM 
officials). ^ DiCarlo had reason to be concerned that Mackenzie might elect 
to avoid trial by becoming a government witness and testifying about handing MBM 
cash to DiCarlo, because -- as both DiCarlo and Mackenzie testified to the 
Commission -- (1) DiCarlo knew that Mackenzie had in fact handed MBM cash to 
DiCarlo, and (2) DiCarlo knew that Mackenzie had been visited earlier in 
1976 by two FBI agents who had offered Mackenzie immunity in return for 
Mackenzie's testimony against DiCarlo. And it is, of course, obvious that 
DiCarlo's chances of avoiding conviction would have been enhanced if Mackenzie 
had admitted receiving cash from MBM but had denied giving any of the MBM cash to 
DiCarlo. 

Thus, according to Mackenzie's testimony to the Commission, DiCarlo asked -- 
and offered to pay -- Mackenzie to give false testimony at the DiCarlo-Mackenzie 

trial to the effect that Mackenzie did not give to DiCarlo any of the cash that 

TOP 
Mackenzie had received from MBM.- LL< - Mackenzie told the Commission that DiCarlo 

offered not only a "significant ... lump sum of money" for such perjured 

testimony, but also "some job security for [Mackenzie's] f amily . MJ - U7 

DiCarlo, as previously mentioned, admitted to the Commission that he and 

Mackenzie discussed the fact that Mackenzie was the only person who could provide 

testimony, consistent with the indictments, about handing MBM cash to DiCarlo. 



105 Mackenzie testimony, Sp. Comm. 6/4/80 at 7-6; DiCarlo testimony, Sp. Comm. 
6/3/80 at 39, 41-42. 

106 DiCarlo testimony, Sp. Comm. 6/3/80 at 36, 116; Mackenzie testimony, Sp. 
Comm. 5/28/80 at 41-42, 44-45, 49-50. 

107 DiCarlo testimony, Sp. Comm. 6/3/8C at 31-33; Mackenzie testimony, Sp. 
Comm. 6/4/80 at 6-7. 

108 Mackenzie testimony, Sp. Comm. 6/4/80 at 7-8. 

109 id. st 8. 

HO DiCarlo testimony, Sp. Comm 6/3/80 at 41-42. 



230 



111 



Further, DiCarlo admitted before the Commission' 1 ' 1 '' that he had 

discussed with Senate President Harrington the fact that only Mackenzie could put 

MEM money into DiCarlo's hands and that 

"if it were to come about that Senator Mackenzie were to be 
convicted and I not, that I would imagine like it might have 
been within the Senate or amongst ourselves that Senator 
Mackenzie's wife would have some type of a job or something to 
be able to live off while Senator Mackenzie -- if he were and 
I not convicted.... If he had gone away a job would have been 
provided in order to support his family or whatever." 

DiCarlo testified to the Commission, however, that he did not offer 

Mackenzie money or a promise of a job for Mackenzie's wife if Mackenzie would 

testify at the DiCarlo-Mackenzie trial that Mackenzie had never given MBM cash to 



DiCarlo 



112 



The Second Occasion . After DiCarlo and Mackenzie were tried and found 

guilty, there was a private conversation between DiCarlo and Mackenzie about the 

11"* 
projected joint new-trial motion. ly According to both DiCarlo and Mackenzie, 

DiCarlo and Mackenzie discussed the possiblility of Mackenzie's executing an 

affidavit, which DiCarlo knew would be false, stating that Mackenzie had given no 

MEM cash to DiCarlo. Further, both DiCarlc and Mackenzie testified that 

Mackenzie die execute such a perjured affidavit, in DiCarlo's State House 

Office. DiCarlo testified that he took custody of the false 

af f idavit . H® DiCarlo testified, further, that he had given the false 

Mackenzie affidavit to attorney Francis DiMento. DiCarlo told the 

Commission that he would not willingly instruct DiMento to produce the false 



affidavit 



lie 



When the Commission indicated that it would consider issuinc a 



HI _Id. at kii-h€, 49; see also 64-67. 

H 2 Id. at 39-41. 

H2 DiCarlo testimony, Sp. Comm. 6/3/80 at 70; Mackenzie testimony, Sp. Corrm. 
6/4/8C at 9. 

114 Mackenzie testimony, Sp. Comm. 6/4/80 at 9-10; DiCarlo testimony, Sp. 
Comm. 6/3/80 at 70-76. 

115 DiCarlo testimony, Sp. Comm. 6/3/80 at 78, 85-86; Mackenzie testimony, Sp 
Comrr. 6/4/80 at 10. 

H£ DiCarlc testimony, Sp. Comm. 6/3/80 at 87. 

117 Id. 

118 Id. at 89. 



231 
summons for the document, attorney DiMento said that his best memory was that the 
false affidavit had been destroyed after Mackenzie's attorney had learned about 



it 



119 



The Third Occasion . Mackenzie testified that in approximately March of 1980, 
he had a private meeting with DiCarlo at which time DiCarlo informed Mackenzie 
that DiCarlo had decided to tell the truth to the Commission. 20 MacKenzie 
said that DiCarlo called MacKenzie a few days after that meeting and asked for 
another meeting, at which DiCarlo said that he had changed his mind about his 
proposed testimony to the Commission because he (DiCarlo) could not bring himself 
to admit that he had taken as much as $11,500 from MBM.- 1 ^- 1 Further, Mackenzie 
said that DiCarlo offered to pay MacKenzie if Mackenzie would falsely testify to 
the Commission that MacKenzie had given only "a rather insignificant amount" of 
MBM cash to DiCarlo. 122 

DiCarlo admitted, in testimony before the Commission in June of 1980, that he 
had two meetings with Mackenzie in the spring of 1980 concerning testimony before 
the Commission. ^ DiCarlo admitted that, during the first of these two 
meetings with Mackenzie, he had told Mackenzie that he had decided to "admit 
having received money" from Mackenzie. DiCarlo's testimony about the second 
meeting is confusing. DiCarlo admitted that he told Mackenzie that he (DiCarlo) 
could not state that he had received a substantial amount of money from MPM, but 

he denied that he offered Mackenzie money if Mackenzie would misrepresent the 

12 5 
amount of money that he had given DiCarlo. 

After the spring 1980 meetings with Mackenzie, DiCarlo did testify tc the 

1 2 6 
Commission that he had accepted $11,500 in MEM cash from Mackenzie. DiCarlo 



119 Statement of attorney Francis J. DiMento, Sp. Comm. 6/3/80 at 89 

120 Mackenzie testimony, Sp. Comm. 6/4/80 at 10. 

121 id. at 10-11. 

122 id. s t 11. 

1 23 DiCarlo testimony, Sp. Comm. 6/3/80 at 79-81. 

124 id. a t 62. 

125 id_. at 82-64. 

126 id. at 116. 



232 

was testifying pursuant to an immunity order which DiCarlo had unsuccessfully 

127 123 

opposed in Supreme Judicial Court. DiCarlo testified: 

"I have been told by my counsel that Mr. Mackenzie has stated 
that $11,500.00 had been given to me by him. Without that 
information from my attorney, Mr. Chairman, I would have 
testified to substantially less than that figure." 

DiCarlo further testified that "not one penny of that [MBM cash] went into my 

pocket. "**■* DiCarlo explained that he used the funds "as expenses for the 

conduct of my political office and political organization" including paid 

political advertisements in local newspapers for organizations such as the United 

Fund, heart Fund, Boy Scout Week, and Girl Scout Week; and to sponsor a Little 

League baseball team, a youth peewee hockey team, and to buy spiritual 

bouquets . 

to have been dishonest" to accept the money from MBM, 



Thus, DiCarlo testified, "I didn't then nor do I now consider it 

131 



127 see Sp. Comm. 4/7/6C at 4-5. 

128 DiCarlo testimony, Sp. Comm. A/7/80 at 12, 

129 id. a t 12, 14. 

130 id. at 13-14. 

131 id. at 13. 






- 233 - 

CHAPTER IX 

THE MANZI-MASIELLC TRIAL IN 1979 

In April of 1978, Albert P. ("Toots") Manzi and William V. Masiello were 

indicted by the Commonwealth of Massachusetts on charges related to MBM. After a 

month-long non-jury trial in 1979, Manzi and Masiello were acouitted. During the 

following year, Masiello admitted -- in testimony before the Commission -- that 

he had perjured himself when he testified at the Manzi-Masiello trial. Masiello 

added that Manzi had also committed perjury. The present chapter discusses the 

Manzi-Masiello trial in light of the additional information available to the 

Commission . 

Events Preceding 

the Manzi-Masiello Trial 

In 1975, during interviews with the FBI, MBM officials told of illegal cash 
payments that they had maoe in 1970 and 1972 to Albert P. Manzi. 1 
The MBM officials said that the 1970 payment was voluntary, but that the 1972 
payment was extorteo from them.^ The United States Attorney's Office in 
Massachusetts did not pursue the matter. Instead, it forwarded the information, 
in 1977, to the Massachusetts State Attorney General's Office.'' 

On January 11, 1978 the First Assistant Attorney General reportedly stated 
that the Attorney General's Office was investigating MEM's alleged 1972 payment 



of $1C,00C in cash to Masiello for Manzi 



It was unclear to 



1 Report dated 6/27/75 of interview of Gerald R. [sic] McKee, Jr. conducted on 
6/23/75 by FEI Special Agent Robert E. Sheehan; report dated 6/27/75 of interview 
of Anthony [E.] Mansueto'conducted on 6/23/75 by FBI Special Agent Robert E. 
Sheehan; report dated 6/30/75 of interview of Jack S. Thomas conducted on 6/26/75 
by FEI Special Agent Robert E. Sheehan. 

2 McKee 6/23/75 FEI interview; Mansueto 6/23/75 FEI interview. 

See letter dated January 24, 157E from Massachusetts Attorney General 
Francis X. Bellotti to United States Attorney Edward F. Harrington. Attorney 
General Bellotti was auoted in the Boston Globe as saying that he was given 
access to the information and documents by federal prosecutors in the spring of 
1977. Article by Robert L. Turner and Robert J. Rosenthal, Boston Globe, 
January 6, 1978, at 1. 

4 Article by Robert J. Rosenthal, Boston Globe, January 12, 1973. 



- 234 - 
some members of the press at the time whether the "targets" 

of the investigation were MBM officials or Manzi and Masiello. On January 17, 
1976 s Massachusetts state grand jury indicted MBM and MEM President Gerald 
McKee, Jr. for alleged tax violations unrelated to the Manzi -Masi el 1 o 
matter. Shortly thereafter, the press reported that the Attorney General was 
suggesting that a special commission be created to investigate matters relating 
to MBM, including how MBM obtained the UMass/Boston contract. 7 

After further investigation of the 1572 transaction, the Attorney General 
concluded that it would be appropriate to give non-prosecution agreements to MEM 
officials in return for their cooperation in various matters, including the 

investigation and trial of the alleged extortion of MEM in 1972 by Manzi and 

p 
Masiello. The formal non-prosecution letter, dated March 14, 1976, stated 

that the non-prosecution status for MEM officials W as 

"predicated upon the assumption that Gerald P. [ sic ] McKee, 
Jr., Anthony Mansueto, Jack Thomas and any other past or 
present employee of McKee, Berger and Mansueto voluntarily 
furnish representatives of the Attorney General's Office 
complete cooperation in securing documents, witnesses, and all 



- See , e.g. , Carol Surkin, "State House Watch: Why Won't Bellctti Go After 
Pels?" Eoston Globe, January 22, 1976, Focus section. 

6 Indictment, Commonwealth v. Gerald McKee, Jr. , Cr. no. 016679 (Super. Ct. 
January 17, 19761 for 17 counts of wage withholding tax violations, G.L. C.62E, 
s.llC; Incictrrent, Commonwealth v. McKee, Eerper 6 Mansueto Inc. [sic] , Cr. no 
016706 (Super. Ct. January 17, 1976) for 17 counts of wage withholding tax 
violations, G.L. c.62E, s.llC. 



>ee e . c 



article by Robert L. Turner, Boston Globe, January 31, 1978 



£ Letter dated March 14, 1976 from Massachusetts Attorney General Francis X. 
Eellotti to William F. Looney, Jr. end Paul F. Markham, concerning a 
non-prosecution agreement for Gerald F. [ sic ] McKee, Jr., Anthony Mansueto, Jack 
Thomas , etal . 



- 235 - 

other related fratters and provide corrplete and truthful 
information concerning the a f orerrent ioned incidents and 
willingly appear and testify truthfully at any grand jury 
proceedings and at any future trials and at any and all other 
official proceedings in a manner consistent with preserving 
the integrity of the Attorney General's ongoing criminal 
investigation. " 

On April 28, 1578, Manzi and Masiello were indicted by a state grand jury for 

actions in connection with MBM ■ s alleged $10,000 payment to Masiello for Manzi in 

c 

May of 1972. They were charged with having extorted the money, in violation 

of G.L. c.265 s.25. In addition, they were charged with illegally soliciting or 

receiving money for political purposes, in violation of G.L. c.55 s.ll. 

On May 2, 1978 a hearing was held in Superior Court, before Judge John T. 

Ronan, at which the Commonwealth sought to have a $10,000 bail reauirement 

imposed on Manzi and Masiello. An assistant attorney general explained : ^ c 

"[B]ail is being reouested in this case for the 
defendants Manzi and Masiello, because the facts underlying 
the indictments have national implications.... 

"The Commonwealth intends to introduce facts at the trial 
of the defendants that will demonstrate a joint criminal 
enterprise on the part of Manzi and Masiello in 1572 to raise 
five hundred thousand dollars in cash for the purpose of 
delivering the money to former President Richard M. Nixon, 
either shortly before the Republican National Convention, or 
at the convention in order to influence Nixon's decision in 
substituting the then Secretary of Transportation John A. 
Volpe as the Republican vice presidential candidate, instead 
of the then vice president Spiro Agnew. 

"In order to raise a portion of this $500,000 the firm of 
McKee, Eerger and Mansueto and its key principals were 
extorted by the defendants...." 



Indictment, Commonwealth v. Albert Manzi and William V. Masiello , Cr. no. 
018334 (Super. Ct. April 28, 1576) for violation of G.L. c.55 s.ll, illegal 
political contributions; Indictment, Commonwealth v. Albert Manzi , Cr. no. 
019125-019127 (Super. Ct. April 28, 1976) for 3 counts of violation of G.L. c.2£5 
s.25, extortion; Indictment, Commonwealth v. William V. Masiello , Cr. no. 
019122-019124 (Super. Ct . April 26, 1578) for 3 counts of violation of C.L. c.265 
s.25, extortion. 

10 Arraionment proceedincs, May 2, 1578, Commonwealth v. Masiello, Manzi , at 
3-4. 



- 236 - 
Judge Ronan denied the request that bail be imposed. ** Trial before Judge 
Joseph R. Nolan began on February 12, 1979. ■* 2 
The Trial and Acquittals 

The Manzi-Masiello trial was heard by Judge Nolan without a jury; the 
defendants chose to be tried by the judge rather than by a jury. The case 
consumed 26 trial days, including seven days of testimony by Anthony Mansueto (a 
former MEM Vice President working, in 1979, for a different firm in Detroit), ^ 
four days of testimony by Gerald McKee, Jr. (MBM President), and two days of 
testimony by Jack S. Thomas (a former MBM Vice President working in 1979 for a 
different firm in Kuwait). 

The critical questions in the Manzi-Masiello trial were (1) what happened at 
the Parker House on May 18, 1972, and (2) what was the disposition of $10,000 in 
cash that MBM generated on May 23, 1972. Those topics have been discussed at 
some length in Chapter V, above. For present purposes, it should be sufficient 
to note that Anthony Mansueto testified at the Manzi-Masiello trial that he 
received a series of telephone calls from Manzi and Masiello reauestinp -- and 
ther demanding -- cash from MBM in satisfaction of "commitments" that MBM had to 



fulfill. 



16 



Masiello 



17 



Jack Thomas said that he received calls of the same nature from 
Gerald McKee, Jr. said that he did not receive any such calls 



11 Id. at 6, e. 

12 Commonwealth v. Masiello, Manzi, 1 M/M 2/12/79 at 3. 

13 Statements in open court by William V. Masiello and Albert F. Manzi, 1 ^/V 
2/12/79 at 7-8. 

1 A Mansueto testimony, 2 M/M 2/13/79 at 33. 

15 Thomas testimony, 9 M/M 2/23/79 at 30. 

1£ Mansueto testimony, 2 ^/^ 2/13/79 at 64-67, 71-74, 77-62, 105-106, 109, 
113-131, 136-137, 139-160. 

17 Thomas testimony, 9 M/M 2/23/79 at 56-67. 



- 237 - 
directly, but that Mansueto and Thomas reported to McKee about the calls they had 
received. McKee and Mansueto testified that a meeting took place on May IE, 
1972 at the Parker House's downstairs restaurant where Manzi heatedly told McKee 
and Mansueto that unless MEM met its "commitments," by paying $25,000 in cash, 
Manzi would see to it that MEM was thrown off the UMass/Boston project and out of 

1 9 

Massachusetts altogether. McKee and Mansueto testified that Masiello, who 
was present during the entire discussion, indicated that MEM should pay the 



money 



20 



McKee and Mansueto further testified that after the meeting they 



decided to give $10,000 to Manzi 



21 



Jack Thomas testified that he procured the 



$10,000 in cash and handed it, in an envelope, to William Masiello while Masiello 
sat in an automobile at Copley Sguare on May 23, 1972. 

Although McKee and Mansueto testified in detail about the Parker House 
meeting -- even to the point of who sat where around the table -- they said that 
they were unable to recall or explain why Mansueto had written on a Parker House 
credit card charge slip for the same day the names or initials of McKee, 
Mansueto, Masiello, and EEC official Frederick Kussman. z The serial number on 
that charge slip was only one digit away from the one on the charge slip on which 
Mansueto hao written the names or initials of McKee, Mansueto, Masiello, and Manzi 



. 24 



18 McKee testimony, 12 M/M 3/1/79 at 40-41. 

15 McKee testimony, 12 M/M 3/1/79 at 63-66; Mansueto testimony, 2 V/V 2/13/79 
at 191-199. The prosecution presented evidence that EBC Project Engineer James 
J. Cusack had provided Manzi with information critical of MEM's performance at 
UMass/Boston and that Manzi mentioned, at the Parker House meeting, that he could 
use Cusack against MEM. 

20 McKee testimony, 12 M/M 3/1/79 at 65; Mansueto testimony, 2 M/M 2/13/79 at 
197. 

21 McKee testimony 12 H/V 3/1/79 at 72; Mansueto testimony, 3 M/M 2/14/79 at 
14, 23-24. 

22 Thomas testimony, 9 M/M 2/23/79 at 76-94. 

23 Mansueto testimony, 4 M/M 2/15/79 at 179-180; McKee testimony, 13 ^/^ 
3/6/79 at 100-101. 



24 



Mansueto testimony, 2 M/M 2/13/79 at 177-178; exhibits 



236 



Moreover, although Mansueto testified that Manzi had said that MEM's 
"commitment" was to contribute toward a $500,000 cash "kitty" which would be 
given to President Nixon to induce Nixon to substitute former Governor John A. 
Volpe for Spiro T. Agnew as Nixon's 1972 Vice Presidential running mate, no 
other witness at the trial testified that Manzi had said such a thing, 26 and 
Volpe took the stand to deny that he had authorized or had knowledge of such a 
fund. z In addition, Mansueto's testimony about what the money ultimately was 
for had to be considered in light of other evidence -- not mentioned by Mansueto 
or McKee -- that Manzi, a fundraiser for then-Governor Francis W. Sargent, was 
holding a fundraising event for Sargent on May 21, 1972_23 

Both of the defendants testified in their own defense. Manzi testified that 
he had met with McKee and Mansueto at the Parker House downstairs restaurant in 
the spring of 1972 but that Masiello was not present at any time during the 



meet i no 



29 



Manzi described the meetinc as innocuous -- no more than an 



exchange of pleasantries 



30 



Masiello testified that he had met with McKee 



25 Mansueto testimony, 2 M/M 2/13/79 at 123. 

26 McKee testified at the trial that Mansueto had told him that the money 
Manzi was seeking was for the $500,000 cash "kitty" (McKee testimony, 12 M/M 
3/1/75 at 57), and McKee specifically testified to the Commission that Manzi had 
not told McKee at the May 18, 1972 meeting or at any other time that the money 
was for Volpe (McKee testimony, Sp. Comm. 6/26/80 at 75). 

27 Testimony of John A. Volpe, 20 ^/V J/16/79 at 178-179. 

2 £ See memoranourr dated May 16, 1972 from "Appointments" to Governor [Francis 
W. Saroent], re: Schedule for Sunday, May 21, 1980; Manzi testimony, 16 M/M 
3/14/79 at 63-65; testimony of Francis k. Sargent, 21 ^/V 3/19/79 at 25; cf . 
Mansueto testimony, 6 M/M 2/20/75 at 65-51. 

29 Manzi testimony, 16 V/V 3/14/79 at 53-54, 57. 

30 id. at 56; 19 M/M 3/15/75 at 69. 



- 239 - 
and Mansueto at the Parker House downstairs restaurant in May of 1972 but that 
Manzi was not present at any time during the meeting. ^ Masiello denied having 



received any money from Jack Thomas of MEM on May 23, 1972 



Manzi denied 
33 



ever receiving any money -- directly or indirectly -- from MEM 

The prosecution attempted to demonstrate that Manzi had said, in a pretrial 
interview attended by e member of the Boston Police, that there had been a 
meeting involving the foursome of McKee, Mansueto, Manzi, and Masiello in the 



spring of 1972 



34 



Moreover, the prosecution presented evidence to try to show 



that Masiello had attempted to get another witness to go along with a false alibi 

for Masiello for May 16, 1972. 35 To rebut Masiello's alibi for May 23, 1972, 

the prosecution called some of the individuals whom Masiello claimed to have been 

36 

with on May 23, 1972 -- and those witnesses denied Masiello's account. 

The prosecution attempted to demonstrate that Manzi was a powerful fundraiser 
who used persistence, demands, and threats in order to come up with illegal cash 
"contributions." 3 Manzi, by contrast, portrayed himself as someone who did no 



31 Masiello testimony, 23 M/M 3/22/79 at 59-60, 95, 139. 

32 16. at 134. 

33 Manzi testimony, 18 M/M 3/14/79 at 77-79. 

34 Testimony of Robert H. Costello, 15 M/M 3/6/79 at 85, 90. Costello is a 
Eoston police detective assigned tc the Attorney General's office. 

35 Testimony of Donald Feldman, 23 M/M 3/22/79 at 26-32; Masiello testimony, 
24 M/M 3/23/79 at 147-153. 

3£ Masiello testimony, 23 M/M 3/22/79 at 129-130; 24 M/M 3/24/79 at 136-139, 
153-158, 166-174; testimony of John M. Flynn, 26 ¥/\^ 3/27/79 at 111-113; 
testimony of Philio Philbin, 25 M/M J/76/19 at 28-38; testimony of Edmund F. 
LaFlume, 26 M/M 3/27/79 at 119-120. 

37 See generally testimony of Mansueto and McKee. For Manzi's success as 
fundraiser and political coordinator, see , e . c . , Volpe testimony, 20 ^/V J/16/7? 
at 145, 157; 21 M/M 3/19/79 at 3; Sargent testimony, 21 W/h' 3/19/79 at 37-40. 



- 240 - 
more than occasionally try to sell some tickets to fundraising affairs for worthy 



politicians and as someone whose philosophy of fundraising was 



38 



"[D]on't try to push a ticket on anybody unless they wanted to 
buv it. 



"The only way that we wanted [people] to buy tickets was that 
they had to give with an open heart." 

Having heard all of the evidence, Judge Nolan announced from the bench on 

March 28, 1579 that he had a reasonable doubt and therefore that he found both 

Manzi and Masiello not guilty of extortion and not guilty of illegally 

soliciting/receiving money for political purposes. 

Masiello's Admission to the Commission 
that Masiello Committed Perjury at the 
Manzi-Masiello Trial; Masiello's Allegation 
That Manzi Also Committed Perjury at the 
Manzi-Masiello Trial; Related Allegations 

Masiello's troubles were not over simply because he escaped conviction at the 

Manzi-Masiello trial. Masiello was subjected to subpoenas and investigations by 

39 

the feceral government and by the Commission. After extensive negotiations, 

immunity-for-truthf ul-testimony arrangements were worked out with Masiello by the 



Commission 



40 



Having been granted immunity, Masiello admitted that he had received $10,000 
in cash from MBM's Jack Thomas on May 23, 1972 in exactly the manner that Thomas 
had testified at the Manzi-Masiello trial. 4 Masiello further admitted that he 
was present along with Manzi at the Parker House on May IE, 1972. Masiello 
said that Manzi had indeed demanded cash from MEM at that meeting, but Masiello 
added that Manzi hao maOe plain that the cash was for the Sargent-Dwicht campaign 
anc that the "commitments" on which MBM was behind were commitments to give cash 
"contributions" related to the amount that MBM received under the UMass/Boston 



contract 



Masiello's testimony on this and related matters is recounted in 



Chapter V, above 



36 Manzi testimony, 19 M/M 3/15/79 at 32-33. 

39 Notes of 1/2/80 interview of William V. Masiello by Special Commission staff, at 7 

40 Croer Concerninc Grant of Immunity tc Williair V. Masiello pursuant to 
Chapter 11 of the Resolves of 1979, Supreme Judicial Court, NF . 79-507, December 
19, 1979. See Sp. Comm. 5/12/80 at 6. 

41 William Masiello testimony, Sp. Comm. 6/24/6C at 62-64. 

42 iti. a t 52-54. 

43 ig. £ t 55-57. 



- 241 - 

Masiello also told the Commission in an interview that Manzi had lied at the 
Manzi-Masiello trial about the May 18, 1972 meeting at the Parker House, about 
not having received MBM cash through Masiello, and about other matters.^ 4 
Moreover, Masiello said that an agreement had been worked out, before the 
Manzi-Masiello trial, by Masiello and Manzi -- through an intermediary -- that 
Masiello and Manzi would each deny that the other had been present at the Parker 
House when McKee and Mansueto were there in May of 1972, even though they both 
knew that such denials were false. 

The Commission attempted to persuade Manzi, through his attorneys, to tell 
the truth in exchange for immunity. No agreement was reached, and Manzi was not 
granted State immunity. Manzi was "summoned" to appear and testify before the 
Commission, but Manzi refused to appear, citing ill health. The Commission 
brought suit to enforce the summons, and the Court found -- in accordance with 
the report of a Court-appointed physician -- that Manzi was physically capable of 
testifying. 6 Manzi appeared before the Commission on June 9, I960 and 
asserted his privilege against self-incrimination. In so doing, Manzi 
refused to answer even those guestions that he had answered under oath at the 



Manzi-Masiello trial 



48 



44 Notes of 1/2/80 interview of William V. Masiello by Special Commission 
staff , at 3. 

45 id. at 3-4. 

46 Order, Ward v. Manzi , June 4, 1980 (Super. Ct.; Erady, J.). 

47 Manzi testimony, Sp. Comm. 6/9/80 at 6-9. 
46 Id. at 6, 8. 



- 242 - 

CHAPTER X 
ACTIVITIES IN MASSACHUSETTS OF WILLIAM F. HARDING 

AND DANIEL J. SHIELDS AT TIMES WHEN THEY WERE NOT 

WORKING FOR MBM 

In this chapter, evidence is summarized concerning activites in Massachusetts 
of William F. Harding and Daniel J. Shields at times when they were not working for 
MBM. As has previously been discussed in this Report, Harding and Shields joined 
MBM in late August or early September of 19 71 when the firm that Harding and Shields 
had been affiliated with — Mauchly Construction Management, Inc. — was acauired 
by MBM. Shields became President of MBM in February 19 73, with McKee moving up to 
Chairman of the Board of MBM and President of MBM's parent company, International 
Management Services, Inc. On July 15, 1973, Shields was discharged by MBM. Harding 
remained with MBM until July 6, 1974, at which time he was discharged. In late 1974, 

Harding and Shields helped to organize a new firm, Project Construction ""anaaerrent , 

2 

Inc. ("PCM"), which obtained several public contracts in Essex County, Massachusetts." 

Why The Commission Has Investigated 
The Activities in Massachusetts of 
Harding and Shields at Times When 
Harding and Shields Were Not Working for MBM 

As discussed in Chapter I of this Report, the Commission was mandated to investi- 
gate matters relating to MBM, particularly in relation to MBM's UMass/Boston contract. 
The Commission was given discretion to determine which other matters to investigate, 
so long as those matters concerned state or county building-related contracts awarded 
on or after January 1, 1968. 

There are several reasons why the Commission elected to investigate activities of 
Harding and Shields at times when those gentlemen were not working for MBM. First, 
although the Legislature did not specifically mandate such an investigation, several 
legislators — including the two sponsors of the Resolve which established the Com- 
mission — indicated that they felt this was a matter that the Commission should look 
into. During the hearing before the Legislature's Joint Committee on the Judiciary 
regarding the creation of the Commission, Rep. Francis Hatch (R-Beverly) , the House 



See Chapter II supra . 

2 

See discussion infra. 



3 

See the more complete discussion in Chapter I supra . 



- 243 - 

4 
Minority Leader, stated: 

"MBM's first cousin, PBM [ sic , should read "PCM,"] has been [in] my 
home county of Essex County- We never built the courthouse, but the 
county treasurer went to court successfully to fight their hiring [.] 
[Q]uery, how did they get in there. What were the ramifications. 
These are the kind of questions that I hope the Blue Ribbon . . . 
Commission will address because it is perfectly clear that it needs 
special talent. It needs investigative help. It needs a lot of 
time by people who presently aren't equipped to do it, and I here and 
now salute Rep. Cohen [Chairman of the Post Audit Subcommittee inves- 
tigating MBM ] . He has done yeoman work, but I think he would be the 
first to admit that he is not prepared to embark on the kind of inves- 
tigatory process that is needed, and that is why I hope very much that 
your committee will act favorably and speedily on this proposal." 

Representative Philip Johnston (D-Marshfield) , one of the sponsors of the Resolve 

establishing the Commission, stated at the same hearing: 

"If the commission is to determine whether or not payoffs are routine 
within our building and construction program, it must have the authority 
to examine contracts other than the MBM contract. Questions have been 
raised about a number of other state and county contracts, including 
the Essex County courthouse 

And Representative Andrew H. Card, Jr. (R-Holbrook) , the other original sponsor 
of the Resolve, said: 

"I do not think the scope of the legislation should be drafted in a more 
limiting fashion than this is right now. The reason for this is there are 
other construction projects which I know of, which I think should be reviewed 
and investigated. 

"One project would be in Essex county, the Essex County Courthouse project ...." 

In addition to these statements by members of the Legislature, there was considerable 

public interest in the means that PCM utilized to obtain contracts in Essex County, as 

7 
evidenced by articles in several newspapers. 

Finally, in order to comply with its mandate to investigate MBM's activities in 
Massachusetts, the Commission felt that it was important to learn as much as possible 
about MBM. In view of MBM President McKee ' s statements during interviews with Com- 
mission staff that MBM had not been a politically oriented firm except during the period 



Commonwealth of Massachusetts, Hearing before the Joint Committee on the Judiciarv 
re: the creation of a Blue Ribbon Commission as proposed in House Bill No. 4632, 
held March 23, 1978, at 109. 

5 Id. at 60. 

6 Id. at 76. 

See Bill Wasserman,"A History of Corruption," North Shore Sunday, June 8, 1980. 



- 244 - 

p 
when Shields and Harding were associated with MBM, it seemed necessary to look into 

Shields 's and Harding '.s activities so that the actions of McKee and Mansueto could be 
distinguished. In previous chapters of this Report the evidence available to the 

Commission about McKee and Mansueto has been discussed at length. In the present 
chapter, the Commission reports the evidence presented to it concerning Harding and 

Shields. 

Activities of Harding and Shields 

in Massachusetts 
Prior to Joining MBM 

William Harding and Daniel Shields began working for MBM in the fall of 19 71, 

when the company with which they had been affiliated — Mauchly Construction "anage- 

9 
ment, Inc. (MCM) — was acquired by MBM. Harding had joined the predecessor of MCM — 

Mauchly Associates, Inc. -- in 1965 or 1966, and Shields came to Mauchly in November, 

11 12 

1963. By 1969, Harding was Vice President for Marketing & Sales, ' and Shields was 

Senior Vice President of Mauchly. When Mauchly was divested by its parent company 

14 
in mid-1970, Shields became President of the spun-off company (MCM). Mauchly and 

MCM were frequently in financial difficulty, making the pursuit of new business a high 

■ ■*. 15 
priority. 

Mauchly/MCM won several public contracts in Massachusetts prior to 196 8. Among 
those were contracts for critical path method ("CPM") computerised construction sche- 
duling work on projects at UMass/Amherst , including the administration building, the 
graduate research center, the first and second additions to Bartlett Hall, and the 



McKee 6/18/79 interviev; at 6-7; McKee 8/30/79 interview at 1-2; see memorandum dated 
June 4, 1973 from Brad (L. Bradford) Perkins to Gerald McKee , Jr., concernina goals 
and trends within MBM, at 1-2, 4, 6. 



o 



See discussion in Chapter II supra . 

10 See SRC Technology Group Change of Status Form dated Nov. 21, 1969 for William F. Hardina, 
Indicating that he was hired in May 1966; ledger sheet found in Mauchly Associates files 
indicating that he was hired in October 196 5. 

Mauchly Associates Payroll Information Form for Daniel J. Shields, startina date Nov. 10, 1?( 

Harding 11/21/69 Change of Status Form. 

' Organization chart dated Oct. 1969, attached to interoffice communication dated Sept. 29, 19f 
from Project Management Division of Mauchly Associates. 

Shields testimony, Sp. Comm. 6/2/80 at 8. 

15 

See , e.g ., interview of Robert K. Stern by Special Commission staff,, at 1. See also 

financial statement of Mauchly Construction Management, Inc. from August 1, 1970 to 

July 31, 1971, prepared by Laventhol Krekstein Horwath & Horwath, at 1-3, 5. 



addition to Machmer Hall. 



- 245 - 
16 



In 1966 (prior to the DMJM contract) , Mauchly did CPM work on Holyoke Community 

17 
College, and the firm began working on the medical school project at UMass/Worcester 

18 
in 1967, being awarded a series of contracts eventually worth more than $160,000. 

The Commission has not investigated the pre-196 8 contracts. 

From 1968 until its acquisition by MBM in 1971, Mauchly/MO 1 won additional nublic 

contracts in Massachusetts. Mauchly was awarded CPM contracts for phases I-VI of 

19 

the Treatment, Training and Research Center in 196 8. Mauchly had at least two sub- 
contracts from MBM, one for CPM updating on the Newton High School and one on the new 

20 
public health laboratory and boiler plant in Jamaica Plain. Starting in 1969, 



16 



17 



19 



20 



Letter dated April 21, 1965 from BBC Director Horace M. Chase to Mauchly Associates, 
announcing the award of a consulting contract for CPM services on Mass. State Project 
B63-1, Administration Building, University of Massachusetts, at an estimated contract 
value of $18,300; letter dated January 18, 196 7 from BBC Director Horace M. Chase 
to Mauchly Associates, announcing the appointment of Mauchly as CPM consultant on 
Mass. State Project No. U-63-4 #1, addition to Machmer Hall, UMass/Amherst , at an 
estimated contract value of $16,300;- letter dated January 23, 1967 from Horace M. 
Chase to Mauchly Associates, announcing the appointment of Mauchly as CPM consul- 
tant on Mass. State Project No. U64-2, first addition to Bartlett Hall, classroom, 
laboratory and office building, UMass/Amherst, at an estimated contract value of 
$16,350; letter dated August 2, 1967 from Horace M. Chase to Mauchly Associates, 
announcing the appointment of Mauchly as CPM consultant on Mass. State Project 
No. U64-3, graduate research building, UMass/Amherst, at an estimated contract value 
of $38,000; letter dated July 25, 1968 from Horace M. Chase to Mauchly Associates, 
announcing the appointment of Mauchly as CPM Consultant on "ass. State Project No. 
U64-2 #2, second addition to Bartlett Hall, at an estimated contract value of $19,875 

Letter dated August 15, 1966 from Horace M. Chase to Mauchly Associates, announcing 
the appointment of Mauchly as CPM consultants on Mass. State Project EJ64-1 #3, 
renovation of main building, Holyoke Regional Community College, with an expected 
contract value of $11,480. 

Letter dated April 7, 1967 from Horace M. Chase to Mauchly Associates, awarding a 
contract for CPM consultant services on Mass. State Project U66-3, clinical science 
building and 400-bed hospital, UMass/Worcester, expected contract value of $24,770. 
Contract No. 442 dated September 16, 1968 between the BBC and Mauchly Associates, 
for CPM consultant services on phases I-V of the UMass/Worcester M.edical School 
Project, with an expected contract value of $125,325. 

Contract #422 between the BBC and Mauchly Associates dated August 29, 1968 for CPM 
consultant services on Mass. State Project M-64-15, Treatment, Training and Research 
Center, Boston, expected contract value $49,145. 

See , e.g ., Mauchly invoice #1112 dated October 29, 1971 for CPM undatinas on 
Newton High School, MBM #470-022; Mauchly invoice ^1111 dated October 2<^ , l c 71 
for CPM updatings on New Public Health Laboratorv Buildina (Jamaica Plain) , 
MBM # 470-020. 



- 246 



Mauchly/MCM won a series of contracts from the Massachusetts 

Port Authority including a contract for planning, scheduling, and coordination of 
construction activities and tenant relocations for the Logan International Airport's 
temporary South Terminal; similar contracts for the permanent South Terminal; a 

design management contract for South Terminal; a cost consulting contract for South 

21 
Terminal; and a cost consulting contract for the Volpe International Terminal. 

22 

These Massport contracts were worth a total of approximately $175,000. At about 

the time of the acquisition by MBM, MCM sought a contract at Massport that MCM 

23 
thought would be worth approximately $800,000, but MCM/MBM' s application for the 

24 

contract was not accepted. In 19 70, MCM obtained a contract from the city of 

25 
Boston Public Facilities Department for work at Boston City Hospital. 



22 



23 



24 



25 



Proposal dated August 27, 1969 from William F. Harding for Mauchly Associates to 
Massport Executive Director Edward J. King, for planning, scheduling and coordina- 
tion of construction activities and tenant relocations for South Terminal Temporary 
Facilities, Logan Airport, expected value of $22,025, signed and accepted by 
Edward J. King, September 10, 1969. Proposal dated November 4, 19 6 9 for planning, 
scheduling and coordination of design activities, South Terminal Project, Logan 
Airport, expected value of $9,405, signed and accepted by Edward J. Kinq, Jan. 29, 191 
Proposal dated June 12, 1970 for design management services on the South Terminal 
Project, Logan Airport, expected value of $26,600, verbal approval given July 10, 19 7, 
signed and accepted by Edward J. King, August 17, 1970. Proposal dated July 13, 1970 
with supplement dated July 23, 1970 for cost consulting servicing the International 
Terminal, Logan Airport, expected value of $25,000, verbal approval July 27, 1970, 
work authorization signed by Massport Chief Engineer T.H. Kuhn on August 29, 
1970. Proposal dated July 15, 1970, for cost consulting on the South 
Terminal Project, Logan Airport, expected value of $24,500, signed 
and accepted by Edward J. King on October 16, 1970. Proposal dated 

June 30, 1970, resubmitted September 8, 1970 for planning, scheduling and coordinaticj 
of construction, South Terminal Project, Logan Airport, expected contract value of 
$69,040, verbal approval by T.H. Kuhn on December 29, 1970. 

There may have been additional contracts; Massport' s records were poorly organized, ai 
most of the information presented in the preceding footnote comes from correspondence 
and copies of Massport checks found in Mauchly 's files. 

Mauchly proposal submitted in December 19 71 for project manaaement services on the 
new South Terminal, Logan Airport, expected contract value $800,000, 

Testimony of Daniel Shields, Sp. Comm. 6/5/80 (private) at 8-9; testimony -of William 
Hardina, Sp. Comm. 6/5/80 (private) at 13; interview of Thomas H. Kuhn by Commission I 
staff, 2/14/80 at 7-8. 

See letter dated September 8, 1970 from Robert T. Kenny (Boston Public Facilities 
Director) to Hon. Kevin H. White re: MCM contract for scheduling and coordinating corfj 
truction activities for the residential and parkina facilities at Boston City Hospitc. 
Mauchlv/MCM received other contracts from the Department of Public Facilities, include 
1968 contracts for work at the District 11 Police Station and at the John Marshall Sc* 
in Dorchester. See letter dated Nov. 13, 1968 from Director Malcolm E. Dudley to 
Hon. Kevin H. White reaardino those contracts. 



- 247 - 



Mauchly' s sales efforts in Massachusetts during the late 1960s and early 1970s 

2 6 
were handled mainly by William Harding, with assistance as needed from Daniel Shields. 

In Massachusetts, as in other states, Mauchly/MCM was often assisted in its sales efforts 

by non-employees who received "finder's fees" when their activities led to the acquisition of 

27 
contracts. These non-employees in several instances were people who knew government officials 

28 
who could be helpful in Mauchly/MCM' s pursuit of public contracts. Mauchly/MCM' s 

principal "finder" in Massachusetts was an insurance salesman named Russell E. Dodds , 

29 
who lived across the street from William Harding in Concord. Dodds worked for the 

same insurance agency as State Senator Ronald C. MacKenzie, and Dodds and MacKenzie 

31 
considered themselves close friends. Dodds introduced Harding to MacKenzie in 196 8 or 

32 
1969, and MacKenzie was receptive to Harding's discussions of CPM and to the request 

33 
that he provide introductions for Mauchly. 

In the fall of 1969, a formal agreement was executed between Mauchly and "Russell E. 

Dodds Associates." The agreement provided: 

"Pursuant to our recent conferences regarding your firm's 
association with Mauchly Associates, Inc., this is to confirm 
our agreement to compensate Russell E. Dodds Associates for 
its efforts on behalf of Mauchly Associates, Inc. 's Project 
Management Division for obtaining new contracts." 

"We agree to compensate your firm, on a mutually agreed 
upon percentage basis of the contract amount to us on each 
contract involving our services on which your firm aided 
Mauchly Associates in obtaining the contract." 

The agreement between Mauchlv and "Dodds Associates" did not specify what percentage 
the "finder's fees" would be. According to Harding, the reason for the lack of speci- 
ficity was that the percentage would vary with the size of contracts won. For certain 



2 6 

Shields testimony, Sp. Comm. 6/5/80 (private) at 405. 

27 

Harding testimony, Sp. Comm. 6/4/80 at 13-15. 

28 

Id . at 14; Harding interviews by Commission staff; Shields interviews by Commission staff. 

29 

Harding testimony, Sp. Comm. 6/4/80 at 9, 19. 

Testimony of Ronald MacKenzie, Sp. Comm. 5/28/80 at 10. 

31 

Id. ; testimony of Russell E. Dodds, Sp. Comm. 3/28/80 (private) at 5. 

32 

MacKenzie testimony, Sp. Comm. 5/28/80 at 12-14; Hardina testimonv, Sp. Comm. 6/4/80 

at 11. 

33 

MacKenzie testimony, Sp. Comm. 5/28/80 at 12-15; Hardina testimonv, Sp. Comm. 6/4/80 

at 22-23. 

Letter dated October 3, 1969 from William F. Hardina (for Mauchly ^ssocates) to Russell E. Dodds 
(for Russell E. Dodds Associates), with Dodds ' s sianature indicatina acceptance. See Harding testi- 
mony, Sp. Comm. 6/4/80 at 19; Dodds testimony, Sp. Comm, 12/19/80 (private) at 13-14. 



- 248 - 



contracts, a "finder's fee" as high as five percent would be awarded, but in other cases 

35 
it might have to be less. 

MacKenzie was successful in providing introductions for Mauchly/MCM which resulted in 

public contracts, and "finder's fees" ranging from $500 to $2,500 were paid by Mauchly/MCM 

"Russell E. Dodds Associates." According to Dodds , the "finder's fees" were shared 

37 
with MacKenzie. MacKenzie says that he received money from Dodds that Dodds said had 

come from Mauchly, but that the money was paid in satisfaction of other debts that Dodds 

38 
owed to MacKenzie. 

Harding and MacKenzie had a friendly relationship which continued after MCM was 

39 
acquired by MBM. ' MacKenzie apparently first got involved in the DiCarlo situation 

as a means of helping Harding impress Harding's new employer (MBM). * Even after 

41 
the DiCarlo-MacKenzie "extortion" of MBM, MBM continued to trv to obtain contracts 

42 

through introductions by MacKenzie. 



Harding testimony, Sp. Comm. 6/4/80 at 13. 

36 Dodds testimony, Sp. Comm. 3/28/80 at 5-6; 12/19/80 at 5-10; Harding testimony, Sp. 
Comm. 6/5/80 at 11-12; Shields testimony, Sp . Comm. 6/5/80 (private) at 6-8; checks 
including $500 MCM check #1015 dated 10/9/70 on account at O'Hare International Bank, 
111.; $500 MCM check #1565 dated 3/17/71 on account at the same bank; $500 MCM 
check #174 dated 5/14/71 on account at Chase Manhattan Bank, New York. 

37 Dodds testimony, Sp. Comm. 3/28/80 at 6; 12/19/80 at 8-10. 

38 MacKenzie testimony, Sp. Comm. 12/19/80 (private) at 7, 13-15. 

39 MacKenzie testimony, Sp. Comm.. 5/28/80 at 7; see Harding testimony, Sp. Comm. 6/4/80 
at 3 5 and p assim . 

£0 

Id. 

:1 See discussion in Chapters VII and VIII, supra . 

42 See memorandum dated August 15, 19 7 2 from Jack S. Thomas to G. McKee , Jr. re: Lahey 
Clinic; cf. memorandum dated September 4, 19 74 from Thomas to McKee re- St. Thomas Airoort 



- 249 - 

Efforts bv Harding and Shields to Win Public Contracts 
Through Essex County Commissioner Daniel J. Burke 

While working for Mauchly/MCM, William Harding pursued public contracts from 

Essex County, Massachusetts. Harding's pursuit of Essex County contracts 

continued after MCM was acquired by MBM. Indeed, Harding's attempts to win Essex 

County work continued even after Harding left MBM in 1974. The present section 

discusses the evidence presented to the Commission concerning these Essex County 

contracts . 

Initial Contacts 

Between Harding and Burke 

William Harding of Mauchly/MCM first met Essex County Commissioner Daniel J. 
Burke in 1969 or 1970. *^ Burke was an attorney who had been elected to 
four-vear terms as an Essex County Commissioner in 1960, 1964, and 1968. ^ 
Burke was subsequently re-elected to an additional four-year term in 1972. He 
was unsuccessful in his 1976 re-election campaign. ^^ 

Burke has testified that he recalls being introduced to Harding Dy Paul 
Gaudet. ^ 6 Gaudet was an Essex County employee (Assistant Dog Officer) who 
acted in some respects as an assistant to Burke. Harding is not sure wnether 



he met Burke directlv or throuoh Gaudet. 



43 



43 Harding testimony, Sp . Comm. 6/4/80 at 56. Testimony of Daniel Burke, Sp. 
Comm. 3/12/80 at 7. 

44 Commonwealth of Massachusetts, P.D. 43 Massachusetts Election Statistics , 
vols, for 1960, 1964, 1968. 

45 Id. . vols, for 1972. 1976. 

46 Burke testimony. Sp. Comm. 3/12/80 at 6-7. 

47 Alan wh^te, "He Blew Whistle on County." Lawrence Eagle Tribune, June 8, 
1980. Burke testimony, Sd . Comm. 3/12/80 at 7; testimony of Daniel Shields, Sp 
Comm. 6/5/80 at 5-6: testimony of William Harding, Sp. Comm. 6/4/80 at 55. 
Gaudet's wife Barbara served as campaign treasurer for Burke. See endorsement 
stamp on check dated November 26, 1973~to "Daniel J. Burke Committee," cited 
infra , and account application papers for "Daniel Burke Committee" in files of 
Essex Countv Bank and St. Jean's Credit Union. 

48 Harding testimony, Sp. Comm. 6/4/80 at 52, 54. 



- 250 _ 

Harding met quite often with Burke, according to Harding's testimony and 
contemporaneous expense reports. ^ 9 Harding also contriPuted to various 
fund-raising events for Burke. 50 

Harding was anxious to win contracts related to construction projects that 
Ess°x Countv was contemplating . 51 However, it was not until 1973 -- while 
Harding was working for MBM -- that Essex County reached the stage of preparing 
for work on those projects. 52 mbm was interested in working for Essex 
County ; 53 an d Harding pursued the potential contracts for MBM. 54 

Harding's focus apparently changed, however, in mid-July 1973. On July 15, 
1973 Harding's friend Daniel J. Shields was fired by MBM. On July 16, 1973 Peter 
T. Pallotta -- who, like Harding and Shields, had joined MBM from Mauchly/MCM -- 



49 i_d- at 56; Burke testimony, Sp. Comm. 3/12/80 at 16-17. Harding expense 
reports for 1970-1974 indicate that he met 39 times with Burke and/or Gaudet. 

50 Harding testimony. Sp. Comm. 6/4/80 at 56: BurKe testimony, Sp. Comm. 
3/12/80 at 22-24, 29-30, 38. See expense vouchers. See Harding MCM expense 
report for 12/17/71 "Entertainment & Dinner - Essex County Commissioners: $250.00, 

51 Harding testimony, Sp. Comm. 6/4/80 at 57. 

52 Shields testimony, So. Comm. 6/5/80 at 9-10. 

53 See letter dated September 27, 1971 from Endicott Peaboay to Gerald McKee, 
Jr.. concernina MBM contract prospects including Essex County Court House project 
management contract: handwritten memoranda dated September 9, 1971 and December 
1971 by Endicott Peabody, concerning Essex County Court House and the Mauchly 
firm, then a subsidiary of MBM; memorandum dated September 20, 1971 from Endicott 
Peabody to his law partner Jeremiah D. Lambert, concerning matters including the 
Essex Countv Court House bill; letter dated November 26, 1971 from Endicott 
p eabodv to Gerald McKee, Jr. concerning contract opportunities, including Essex 
Countv Court House. 

54 Harding testimony, Sp. Comm. 6/4/80 at 66. 



- 251 - 
also was fired by MBM.55 Because of Harding's close association with Shields 
and Pallotta, Harding had reason to believe that his job at MBM also was in 
jeoDardv.56 Accordingly, Harding stepped up his activity in regard to the 
potential Essex County contracts, but he did so with an eye toward having the 
contracts awarded to a new company that he and Shields would form. 57 
The MacKenzie-Tully Bill 

One of the first matters that had to be resolved if Essex County were to be 
able to hire a private firm as construction consultant or project manager was the 
legal authority of the county to engage such a firm. A bill to permit counties 
to hire such firms was filed in the Massachusetts State Senate on July 31, 1973 
bv Senators Ronald C. MacKenzie and B. Joseph Tully. 58 According to MacKenzie, 
William Harding had asked MacKenzie to file the bill, and MacKenzie did so as an 
accommodation, with MacKenzie asking Tully to co-sponsor the bill since Tully was 
a member of the majority party and was Chairman of the Senate Committee on 
Count ies . 59 

The bill was late-filed. That is, it was filed after tne normal deadline for 



filing legislation for the session 



60 



In order to be admitted for 



consideration on the merits, approval had to be granted by the Joint Committee on 
Rules. 61 The MacKenzi e-Tul 1 y bill was approved on August 14, 1973, by action 



55 See ChaDter II supra . 

56 Harding testimony, Sp. Comm. 6/4/80 at 58. 

57 Harding testimony, Sp. Comm. 6/4/80 at 58. 

58 Petition to accompany Senate Bill No. 1872, to authorize county 
commissioners to hire management consultants, filed July 13, 1973. 

59 Notes of 5/14/80 interview of Ronald C. MacKenzie by Special Commission 
staff, at 1. 

60 The normal filing deadline is the first Wednesday in December. 
Commonwealth of Massachusetts, Rules of the Senate, House of Representatives, anc 
Joint Rules , Joint Rule 12. 

61 Id . To suspend Rule 12, in addition to approval of Joint Committee on 
Rules, the vote of f our-fifths of the members of each brancn is needed. 



- 252 - 



of the Joint Rules Committee, which was chaired by then-Senate Majority Leader 
Joseph J.C. DiCarlo.62 

According to William Harding's contemporaneous expense report, Harding had 
dinner on Julv 24, 1973 with MacKenzie and DiCarlo. 65 But neither Harding, nor 
MacKenzie, nor DiCarlo recalled sucn a meeting when asked about it by Commission 
staff. 

The MacKenzie-Tully bill was enacted by both houses on October 1, 1973 and 

signed into law October 15, 1973. The emergency preamble on the bill made it 

effective immediately. 

Burke's Agreement to Help 

Harding and Shields 

Obtain Essex County Contracts 

William Harding met several times with Daniel Burke during 1973. 6Z * 

According to Harding. Burke became so impressed with Harding's aDilities and 

experience that Burke promised to do what he could to nelp Harding win Essex 

Countv contracts. 65 Harding has further testified that BurKe's understanding 

with Harding was personal to Harding -- that is, that Burke was not offering to help 

MBM (Harding's firm) get contracts; rather, Burke was intent on helping Harding 

ft fi 
receive contracts, regardless of what company Harding might be affiliated with. 

Harding's testimony on this point has been corroborated by Daniel Shields. 



62 Report of Joint Rules Committee, dated August 14, 1973. 

63 Harding weeklv expense report for period ending July 28, 1973. 

64 See Harding expense reports entries for 4/3/73; 6/12/73; 7/25/73; 9/3/73 
among others . 

65 Harding testimony, Sp. Comm. 6/4/80 at 57, 66-67. 

66 16. at 66-67. 

67 Shields testimony, Sp. Comm. 6/5/80 at 18. 



253 



In testimony to the Commission, Daniel Burke agreed with Harding and Shields 

that he had conversations with Harding and Shields which culminated in Burke's 

deciding that project management was a good idea for Essex County and that Burke 

would support Harding's and Shields's firm for the Essex County project. 68 

Burke testified that there was no guid pro quo for his support of the 

Harding/Shields firm, but he added* 59 that Harding and Shields 

"probably made all kinds of promises to the finance people in 
my campaign and to me formally in discussions, but at no time 
was it ever tied to them acquiring a contract.... I believe my 
indication of support [for their firm] was before they even 
started on anything else, but there was,never any ['] you 
don't get the contract unless you give me X amount of money 
[*] or ['] vou have to contribute X amount. ['] There was never 
anything of that. 



"They always seemed to be generous type people, but at no 

time did I initiate a question of you are not doing anything 

unless you guarant[ee] that you do such and such. Never 
happened . " 

Shields, in testimony to the Commission, confirmed tnat there were 
discussions about "political contributions" to BurKe. 7 ^ Shields testified that 
it was agreed that Burke would be given $25,000 in "campaign contributions" -- 
wHh $7,000 going to Burke "up front" ( i.e. , before any contracts were awarded) 
and the balance over the term of the contracts that a Harding/Shields firm would 
receive from Essex County. 71 Shields testified that this arrangement was 
worked out by Harding. 7 ^ 

Harding's memory was less specific, but Harding recalled in testimony before 
the Commission that money was to be paid to BurKe and Gaudet ." As Harding 
exDlained, "[We] were appreciative of [Burke's] efforts and we wanted to help 
him, no question about that." 7 ^ Gaudet was entitled to money, according to 
Harding, because Harding believed that Gaudet "was also very influential in 
swayina the County Commissioners on tne construction manaqement views. "^ 



68 Burke testimony. Sp. Comm. 3/12/80 at 39. 

Burke testimony, Sp. Comm. 3/12/80 at 38-40. 

70 Shields testimony, Sp. Comm. 6/5/80 at 18. 

71 Shields testimony, Sp. Comm. 6/5/80 at 18-20. 

72 Id. 

73 Harding testimony, Sp. Comm. 6/4/80 at 71-72, 
in J_d. at 98. 

75 Id. at 75. 



- 254 - 



The Formation of PCM 



Daniel Burke's undertaking to help Harding/Shields obtain Essex County 
contracts came at a time when Shields was a man without a company -- having been 
fired by MBM on July 15, 1973 -- and Harding was on tenuous ground with MBM. 7( = 
Accordingly, Harding and Shields decided to take steps to have the Essex County 
contracts awarded to a company other than MBM. 

The following arrangement was utilized: A new company named Project 
Construction Management, Inc. ("PCM") was established by Shields and another 
former MBM employee named Jerry J. Campana. 77 PCM had no operating staff. 78 
It was merely a sales organization . 7 ^ Shields attempted to keep his 
participation in PCM off the public record, because Shields did not want to 
ieopardize a severance/"consult ing" agreement that he had finally reached with 
MBM whereby Shields was to be paid $25,000 per year for five years -- but.wnich 
contained a type of non-competition clause. ^0 Harding apparently also did not 
want to be publicly associated with PCM, since Harding was still working for 
MBM. 81 

Indeed. Harding was collecting expense reimoursements from MBM for Harding's 



76 Harding testimony, Sp. Comm. 6/4/80 at 58; Shields testimony, Sp. Comm. 
6/5/80 at 8, 10. 

77 Shields testimony, Sp. Comm. 6/5/80 at 11, 13. 

78 Id. at 13. 

79 id. 

80 Id . at 8, 13-14; Harding testimony. Sp. Comm. 6M/80 at 67-68. See also 
ChaDter II supra . 

81 Shields testimony, So. Comm. 6/5/80 at 9-10, 12. 



- 255 - 

sales efforts on the very Essex County projects that would be going to PCM. 82 

Since PCM had no operating staff, it was arranged that the actual work for 
Essex County would be done by a relatively new and small firm named Slaydek 
Construction Services, Inc. 83 The name "Slaydek" combines portions of tne 
names of its two principals: Roy Slayton (an investor) and Adek Apfelbaum 
(another former MBM employee). 84 

Although Slaydek was going to do all of the actual work for Essex County, it 
apparently was agreed, according to documents in the Commission's possession, 
that PCM would receive 40 percent of all monies received from Essex County 
contracts, and Slaydek would receive the other 60 percent. 85 The $25,000 which 
Shields testified was going to go to Burke was to be advanced in the first 
instance bv Slaydek, according to Shields, 86 and apparently it was then going 
to be deducted from PCM ' s 40 percent share of contract proceeds. 87 

The decision to form PCM was made sometime late in 1973, and the firm's 
certificate of incorporation -- dated December 28, 1973 — was filed in Delaware 
on January 3, 1974.88 pq^ neglected to register 3S a foreign corporation in 
Massachusetts until October 18, 1974.89 Tne effects of that oversight are 
considered below. 



82 See . for example . 1973 expense reports cited in footnotes 63-64. 

83 Shields testimony. Sp. Comm. 6/5/80 at 17. Harding testimony, Sp. Comm. 
6/4/80 at 64. 

84 id. at 59. 

85 See Memorandum of Understanding between P. CM. Inc., and SlaydeK 
Construction Services, Inc., dated March 27, 1975. 

86 Shields testimony. Sp. Comm. 6/5/80 at 20. 22. 

87 See Memorandum of Understanding between P. CM. Inc., and Slaydek 
Construction Services, Inc., dated Marcn 27, 1975, at 2 (paragraph p). 

88 Certificate of Incorporation of P. CM., Inc., dated December 28, 1973 and 
filed in Delaware January 3, 1974. 

89 Commonwealth of Massachusetts Foreign Corporation Certificate dated October 
18, 1974. 



- 256 - 

The BBC's Position Regarding 
Use of PCM by - Essex County 

Even after the MacKenzie-Tully bill was enacted (permitting counties to hire 
construction consultants), and even after Harding/Shields convinced Burke to 
"sponsor" or advocate PCM, there was still a roadblock to PCM's obtaining Essex 
County contracts. Early in 1974, Robert D. SanClemente -- an engineer on the 
staff of the state Bureau of Building Construction ("BBC") -- learned that Essex 
County was thinking of hiring PCM as project manager for Essex County 
projects. 9u " SanClemente disapproved of the hiring of an outside project 
manager, since SanClemente understood that the BBC was required by law to provide 
most or all of the services that a project manager would provide. 91 

Harding and Shields attempted to allay such concern by engaging an attorney 
to appear before the Essex County Commissioners to explain that the County did 
have the legal authority to hire a consulting or project management firm such as 
PCM. 92 i n Feoruarv 1974 PCM obtained the services of Francis X. Bellotti, wno 
appeared before the County Commissioners on February 5, 1974 ana made a brief 
presentation addressed primarily to tne question of the county's authority. 9 - 5 

Although the hiring of a firm such as PCM may have been legal, SanClemente 
felt it was inappropriate, and SanClemete conveyed this concern to Malcolm 
MacPhail, counsel for the BBC. 9Z| SanClemente tnen wrote a memorandum to his 



90 Testimony of Robert SanClemente, Sp. Comm. 6/4/80 at 5, 9. See minutes of 
Essex County Commission, February 5, 1974. 

9 1 SanClemente testimony, Sd. Comm. 6/4/80 at 10. 

92 Shields testimony, Sp. Comm. 6/5/80 at 36-37. 

93 Francis X. Bellotti is the duly elected Attorney General of the 
Commonwealth and a memoer of the Special Commission. Attorney General Bellotti 
cooperated fullv with the Commission's investigation of PCM, submitting to 
interviews and making available all of his former law firm's files on PCM. 
Further, he recused himself from all votes and meetings of the Commission having 
to do with PCM. At the t^.me he was employed by PCM, Bellotti was a lawyer in 
private practice. His office represented PCM on this single matter from FeDruary 
to November 12, 1974, when Bellotti withdrew his representation. 
Bellotti's office never received a fee from PCM, and both Shields and Harding 
told the Commission that Bellotti was never informed of PCM's commitment to make 
campaion contributions to Burke. Shields testimony, Sp. Comm. 6/5/80 at 38; 
Harding interview 7/11/79 at 2; 6/3/80 at 9; letter dated November 11, 1974 from 
Francis X. Bellotti and Martin S. Cosqrove to W. Barry MacDonald, Essex County 
Attorney, withdrawing representation of PCM; letter dated November 12, 1974 from 
Francis X. Bellotti and Martin S. Cosgrove to Project Construction Management, Inc., 
withdrawing representation. 

94 



SanClemente testimony, Sp. Comm. 6/4/80 at 10 



- 257 - 

supervisor, Arthur Poulos, summarizinq MacPhail 's advice. 5 In the memorandum, 

SanClemente said that MacPhail had informed SanClemente that county officials did have 

the right to hire management consultants, but that MacPhail had 

"warned that the County Officials should be made aware that 
any consultant will be the responsibil i [ t ]y of the County 
Officials and the terms of any such contract should not be 
allowed to duplicate or interfere with the duties of the 
Director of Building Construction or the appointed 
designer.... [A] Management Consultant's work may duplicate 
or conflict with the Director's responsibility. 

"It is the duty of the Director of Building Construction to 
control and supervise all building construction projects under 
his jurisdiction by virtue of Cnapter 6A, Sections 22 thru 
30. The Bureau must review and aoprove plans and 
specifications for the construction of such Puildings to see 
that documents are clear and complete and permit execution of 
the project with economy and efficiency. In the construction 
phase the Bureau has full responsibility of inspection, 
supervision, and final acceptance of a project. 

"It is my understanding that the Essex County Commissioners 
intend to enter into a contract with a Management Consultant 
for project No. CE5-1 and No. CES-2. 

"I will be meeting with the Commissioners on Marcn 19, 1974 
and will inform them of the above information unless otherwise 
directed . " 

SanClemente apparently was left unsatisfied by whatever response he may nave 

received from the Essex County Commissioners on March 19, 1974, because he 

drafted a letter which Arthur Poulos sent to the Essex County Commissioners^ 

acknowledging that the County had the legal authority to hire a management 

consultant but -- 

"recommend [ ing ] that you [ i.e. , the County Commissioners J do 
not enter into a contract with a management consultant firm 
for the following reasons: 



95 Bureau of Building Construction Inter-office Memorandum dated Marcn 7, 1974 
from Robert SanClemente to Arthur Poulos, re: conversation with Malcolm MacPhail, 
counsel for B.B.C. on March 7, 1974. 

96 L°tter f rom Arthur Poulos to Essex County Commission Chairman Edward H. 
Cahill re: Mass. State project CES 73-1 & CES 73-2, First District Court in Salem 
& District Court of Peabody. The letter is completely typewritten, except for a 
handwritten date ''March 28, 1974). It is not clear when or by whom the date was 
written on the letter. See also Poulos testimony, Sp. Comm. 6/4/80 at 17; 
SanClemente testimony, Sp . Comm. 6/4/80 at 11. 



- 256 - 

"1. It is the function of the Bureau of Building Construction 
to provide engineering expertise, coordination and overview in 
all phases of these projects. These services are provided oy 
an experienced, trained staff consisting of engineers, 
technicians and contract administrators. ... We feel a large 
portion of a management consultant's services will Pe provided 
by the Bureau. 

"2. The cost of a mangement consultant will come out of the 
project funds and in essence will reduce the size and cost of 
the court houses. Using an unconfirmed figure of 3% for the 
consultant's fee this would represent about ... the size of 
one small court room. ... 

"3. The Bureau has the utmost of confidence in the abilities 
of the project designers.... 

"4. It is conceivable that the addition of another 
independent firm could result in a longer design and review 
period. The management consultant [' ]s advice and 
recommendations must undergo time consumming [ sic ] reviews and 
evaluations by the designer and the Bureau. 

"You are reminded that if a management consultant firm is 
hired they will be responsible for making recommendations or 
providing advice to only the County. According to the terms 
of the design contracts we feel the appointed designers are 
under no obligation to review or implement anv recommendations 
made by an outside consultant. 

Despite having taken this strong position against the use of a project 

manager, Poulos sent another letter just a few weeks later expressing a very 

different view. In a letter dated May 1, 1974 and addressed to Daniel 

Burke. 97 Poulos wrote: 

"Your letter of April 24, 1974 requests an interpretation of 
the official Dosition of the Bureau of Building Construction 
in regard to the services of Construction Management firms. 

"Please be advised that the Bureau of Building Construction 
has in many instances employed the services of Constructon 
Managers to assist in expeditious adherence to accelerated 
design and construction schedules. We have found the services 
of Construction Management to be quite worthwhile in the many 
projects utilizing them. ... 

"In the case of Essex County wnich does not have a large 
technical staff the concept of Construction Management may 
have some merit Darticularly in view of the number of projects 
Dresently oeing designed in Essex County. The advi[c]e 
provided and the computer scheduling of the numerous and 
varied projects oresentlv under design in Essex County could 
be most helpful to the officials of Essex County. 

"The Bureau of Building Construction does not feel that the 
employment of a Construction Management Team would be in 
conflict with our agency, and we are willing to cooperate and 
work in concert with any group selected. 



97 Letter dated May 1, 1974 from Arthur Poulos to Daniel J. BurKe. 



- 259 - 

"We hope this communication might clear any confusion 
surrounding the BBC policy regarding the use of Construction 
Management firms and if further information is desired, please 
feel free to call upon us." 

Although Poulos's letter said that it was answering an April 24, 1974 letter 
from Burke, neither Poulos nor anyone else in the BBC was able to locate such a 
letter from Burke, when requested to do so by the Commission . 98 Indeed, Poulos 
testified that the file on the whole project could not be located. 99 As 
previously noted, the first "Poulos letter" had been drafted by SanClemente and 
sent out with Poulos's knowledge and approval. The second "Poulos letter" was 
not drafted or even reviewed bv SanClemente before it was sent out, according to 
SanClemente, even though SanClemente was the BBC employee specifically assigned 
to the Essex County projects. 100 

When Poulos was asked whether he discussed the subject matter of the second 
"Poulos letter" with anyone else at the BBC before writing the letter, he 
replied: "I may have discussed it with the director, that would have been 
consistent with what I would do in a case such as this . "- 1 - 01 The BBC Director 
at that time was Walter J. Poitrast. 1° 2 

There was additional testimony to the Commission suggesting that Poitrast 

might have had something to do with the second "Poulos letter." William Harding 

(of MBM/PCM^ testified: 11 ^ 

"I worked on th[e] possibility of making sure I got a letter 

from the Bureau of Building Construction saying in effect to 

Essex Countv that they thought it would be wise for them to 
have a construction manager on this site. ... 



"I would assume [I discussed this subject with Mr. Poitrast]. 
I assume he probably was the one asked, but I don't remember." 



98 Poulos testimony, Sp. Comm. 6/4/80 at 18. 

99 id. at 19. 

100 SanClemente testimony, Sp. Comm. 6/4/80 at 13. 

101 Poulos testimony, Sp. Comm. 6/4/80 at 25. 

102 Id. at 8. 

103 Harding testimony, Sp. Comm. 6/4/80 at 63, 78. Harding went on to 
indicate that it was possible that he had spoken with Poulos on tne suoject, but 
that he had no memory of having done so. 



- 260 - 

Essex County Contracts 
Awarded to PCM 

PCM received several contracts from Essex County. Before describing those 
contracts, however, it is necessary to discuss a purported contract from Essex 
County that was apparently used as the basis for obtaining one or more bank loans 
for PCM, even though -- according to testimony -- the purported contract was not 
a real contract. 

The purported contract was not able to be found anywhere in the official 
records of Essex Countv. It came to the Commission's attention when it was 
located in the loan records of a bank which had loaned money to PCM. iuZt 

The purported contract is dated December 7, 1973 and contains what purport to 
be the signatures of Daniel J. Burke (for Essex County) and Jerry J. Campana (for 
PCM).1° 5 The document would appear to be a contract by which Essex County 
engaged PCM as construction manager for a Centralized Correctional Institution in 
Middleton. It recites that the budgeted construction cost of the project is 
$16,000,000 and the PCM fee for "basic services" is to be 3.5% of construction 
cost. I- 06 Simple mathematics reveals that PCM ' s fee -- at 3.5 percent of $16 
million -- would have amounted to approximately $500,000. 

According to the testimony of Daniel Shields, Burke agreed to sign this 
document to enable PCM to obtain financing from banks . I 1 - 17 Although Shields 
described the document as a "sample contract , "108 there does not appear to be 
anything in the document to indicate that it was merely a "sample," nor do tne 
loan records of the bank in question indicate that the bank was informed that the 
document was merely a "sample contract . "109 j ne commission has no evidence and 
no reason to believe that any of the Essex County Commissioners other than Burke 
knew of this purported contract. 



104 New England Merchants National Bank records concerning March 1974 loan 
negot iat ions . 

105 Document headed "Agreement between: Essex County. Commonwealth of 
Massachusetts and P.M.C. [ sic ] Inc.," dated December 7, 1973. 

106 l_d. at 1, 21. The purported agreement specifies that PCM would also oe 
paid on a cost-plus basis for job site management costs, transportation costs, 
and other out-of-pocket costs. j_d. at 21, 25, 26. 

107 Shields testimony, Sp. Comm. 6/5/80 at 34. 

108 Id. 

109 New Enaland Merchants National Bank records. 



- 261 - 

There were several contracts, however, that were approved unanimously Dy tne 

Essex County Commissioners for PCM, and those contracts were intended to oe 

genuine . 1 10 The first of these were voted at the meeting of tne Essex County 

Commissioners held on February 5, 1974. Tne minutes of tnat meetinglll record 

that 

"Upon motion of Mr. Bur^e, duly seconded, it was 
unanimously VOTED: 

"To appoint Project Construction Management Inc. ... as 
the Construction Manager for the County of Essex for the new 
Salem District Courthouse, Peabody District Courthouse, and 
proposed Jail Complex building projects, subject to the 
approval of the Architect, the Bureau of Building 
Construction, and negotiations as to the fee to be charged, 
. . . and subject to the final approval of the Essex County 
Commissioners . 



"Upon motion of Mr. Burke, duly seconaed, it was 
unanimously VOTED: 

"To bring to the attention of the Board of Trustees for 
the Essex Agricultural 4 Technical Institute, the availability 
of this type of management construction service for their new 
high school and other new buildings under consideration." 

Further, according to the minutes of the Essex County Commissioners' meeting of 
May 7, 1974:11? 

"Upon motion of Mr. Burke, duly seconded, it was 
unanimously VOTED: 

"That Project Construction Management Inc. ... be 
aDpointed as the construction management firm for Esse/ 
County, specifically for the Peabody District Courthouse, the 
First District Courthouse for Salem, and other construction 
projects as they are approve[d], for the lump sum fee of 
3-1/2% of the total project contract." 

Formal contracts were executed within a month of tne Ma y 7, 1974 vote. Tne 

r ees that P CM was to receive under these and other contracts f rom Essex Cour 

would be in the hundreds of thousands -- if not millions -- o f 



110 See following discussion in text of formal motions. See also Decision 
and Order for Judgment , Dj ff / ■■/ . g^r-^e (Super. Ct., Essex Co., Oct. 20, 1976) 
at 1-3. ' 

111 Minutes of 2/5/74 meeting of Essex County Commissioners. 

112 Id. 'or 5/7/74. 

Agreement oetween Essex County. Commonwealth of Massacnusetts and P. CM. 
Inc., dated June 4, .974 ana signed oy Commissioners Danie. I. i. rke, Edward H. 
Cahill, and Katherine M. Donovan and, for PCM, A[dek] Apfeioaum. 



- 262 - 

dollars.^ 14 

Payments to Burke 
By" PCM Officials 

As previously mentioned, Daniel Shields testified to the Commission that 
there was an agreement pursuant to which PCM officials would furnish $25,000 in 
"camDaign contributions" -- $7,000 "up front" -- to Burke in connection with 
Burke's assistance in PCM's attempts to procure contracts from Essex County. 
Shields further testified that since PCM was a new company with no other 
contracts and no assets, and since neither Shields nor Harding was personally in 
the financial condition to be able to make such "contributions," tne funds would 
come from Slaydek. 115 The money would then follow a convoluted path: first, 
it would go to Shields and Campana. They, in turn, would write out personal 
checks to Harding. Then, Harding would write out checks to funnel the money to 
Burke's campaign. H6 

The Commission located microfilms of checKS and deposit slips evidencing the 
transfer of funds from Shields /Campana to Harding to the Burke Committee. As 
shalL be seen, some of the transfers from Harding to the Burke Committee were not 
made directly. 

The first series of checks started with a check dated November 19, 1973 for 
$4,000 from Shields tc Harding. 117 (Shields had previously obtained tne $4,000 
from Slavdek . U18 Harding deposited the $4,000 Shields check to Harding's bank 



114 See , e.g. , Contract dated January 28, 1975 between PCM and Essex County. 

115 Shields testimony, So. Comm. 6/5/80 at 19-20, 22. 

116 Id. at 21-22. 

117 cneck number 598 dated November 19, 1973 for $4,000 to tne order of 
William F. Harding, drawn on the personal account of Dianne E. Snields, signed by 
Daniel J. Shields. See Shields testimony, Sp. Comm. 6/5/80 at 23. 

118 Shields testimony, Sp. Comm. 6/5/80 at 23. 



- 263 - 
account on November 20, 1973. H 9 Harding then wrote a check dated NovemDer 26, 
1973 for $2,000 payable to the Daniel J. Burke Committee, 120 and that check was 
deDOSited on November 27, 1973 into the Burke campaign account by Barbara 
Gaudet. 121 Barbara Gaudet, in addition to being the wife of Burke's associate 
Paul Gaudet, was campaign treasurer for Burke. 122 Harding also wrote out a 
$1,000 check payable to Paul Gaudet. 12:5 That check was dated November 20, 1973 
and was cashed the following day at the Lynn Five Cent Savings Bank. 12A Tnis 
money may have been intended for Burke. 2 ^ 

The next series of transfers occurred in December of 1973 and January of 
1974. By check dated December 28, 1973, Jerry Campana transferred $5,000 to 



119 Check is endorsed "William F. Harding." Harding identified the signature 
as his own. Harding testimony, Sp. Comm. 6/4/80 at 84. 

120 Check number 379 dated November 26, 1973 for $2,000 to the order of Daniel 

J. Burke Committee, drawn on the personal account of William F. Harding. Harding 
identified the signature as his own. Harding testimony, Sp. Comm. 6/4/80 at 74, 
85. 

121 The check is endorsed with the stamp "For Deposit Only, D. Burke 
Committee. Barbara Gaudet, Treas." The banK recorded that the check was 
processed November 27, 1973. 

122 id. 



123 Check number 370 dated November 20, 1978 for $1,000 to the order of Paul 
Gaudet on the personal account of William F. Harding. at 74. Harding identified 
the signature as his own. See Harding testimony, Sp. Comm. 6/4/80 at 74, 85. 

124 The check is endorsed "Paul C. Gaudet". Tne bank processed the check 
November 21, 1973. 

125 Shields testimony, Sp. Comm. 6/5/80 at 24. 



- 264 - 

Harding. 1 - 26 Harding deposited the check. 127 On December 28, 1973, a check 
for $3,000 from Harding to "Cash" (dated Decemoer 24, 1973) was deposited to the 
Burke Committee account by Barbara Gaudet. 128 On January 5, 1974, a Harding 
check for $1,000 to "Cash" (check dated December 24, 1973) was negotiated Dy Paul 
Gaudet at the State Street Bank & Trust Company. 129 

The checks actually going to Burke's committee and to or through Gaudet 
during these first two rounds of transactions total $7,000 -- precisely the 



amount that Shields testified was to be "up front" money. 



130 



It should be 



noted that Shields told Commission staff about this figure before the Commission 
staff had heard of (or obtained) the financial records that tend to corroborate 
it. 131 

PCM received its first official approvals from Essex County on February 5, 
1974, as previously discussed. Shields made a $2,000 check payable to Harding 
dated February 9, 1974, and Harding deposited the check in his bank account. 1 -' 2 



126 Check number 950 dated December 28, 1973 for $5,000 to the order of 
William F. Harding, drawn on the personal account of J.J. Campana and Joan 
Campana, signed by J.J. Campana. See Harding testimony, Sp. Comm. 6/4/80 at 76. 

127 The check is endorsed "William F. Harding." Harding identified the 
signature as his own. _lrj . at 86. 

128 Check number 410 dated December 24, 1973 for $3,000 to the order of 
"Cash," drawn on the personal account of William F. Harding. The Dank processed 
the check on December 28, 1973. Harding identified tne signature as his own. 
Id. at 86. 

129 Check number 409 dated December 24, 1973 for $1,000 to the order of 
"Cash," drawn on the personal account of William F. Harding. The cnecK is 
endorsed "Paul C. Gaudet." Essex County Bank processed the check on January 5, 
1974. Harding identified the signature as his own. I_d. at 86. 

130 Shields testimony, Sp . Comm. 6/5/80 at 20. 



1 



Shields interview. 



132 Check number 160 dated February 9, 1974 for $2,000 to tne order of William 
r . Harding, drawn on the personal account of Daniel J. Snields. Snields 
identified the signature as his own. Shields testimony, Sp. Comm. 6/5/80 at 29. 
The check was processed by Harding's bank on February 11, 1974. Harding 
acknowledged receipt of this payment. Harding testimony, Sp. Comm. 6/4/80 at 77, 
90. 



- 265 - 

Harding, in turn, made a $2,000 check payable to Paul Gaudet. !33 That check, 

dated February 15, 1974 was endorsed by Gaudet. 

No subsequent payments to Burke and/or Gaudet were found by the Commission or 

testified about by the witnesses. The fact that there apparently were no further 

payments may be related to the fact, to be discussed in the following section, 

that PCM never got paid for any of the work it did for Essex County. 1 - 54 Before 

turning to PCM ' s problems in receiving payment, it should be mentioned that 

Daniel Burke's salary as Chairman of the Essex County Commissioners in 1973 was 

$8, 799. 73. 1? 5 It should also be noted that the legal limit on personal 

contributions in Massachusetts was $3,000 in 1973 and $1,000 in 1974. 136 

Direct or indirect corporate contributions in any amount were i llegal . ^^7 

The Refusal bv 

Essex County Treasurer 

Thomas F. Duffy 

To Pay PCM | s Invoices 

PCM, as discussed above, had no operating staff and was not equipped to 

perform directly the services called for under the contract between PCM and Essex 

County. Instead, PCM in effect subcontracted the work out to Slaydek 

Construction Services. Slaydek thereupon did perform some work for Essex County 



133 Check number 448 dated February 15, 1974 for $2,000 to the order of Paul 
C. Gaudet, drawn on the personal account of William F. Harding. Harding 
identified the signature as his own. _l_d. , at 90. 

134 Harding testimony, Sp. Comm. 6/4/80 at 82-83. Shields testimony, Sp. 
Comm. 6/5/80 at 45. 

135 G.L. c.34 s.5. 

136 Acts of 1962, c.444: Acts of 1973, c.1173. 

137 Acts of 1946, c.537 s.10. 



- 266 - 

on the various projects, primarily through Adek Apfelbaum . 1 38 pcm then 
submitted invoices to the county for payment. 139 jhe County Commissioners 
aDproved the bill for payment, l 4u but County Treasurer Thomas F. Duffy refused 
to pay the bills. 141 

There was at least one technical basis for refusing payment. PCM had 
neglected to register in Massachusetts as a foreign corporation, 142 and that 
failure permitted the Treasurer to avoid suit for the fees that otherwise might 
have been due. 14 3 Jo remedy the omission, PCM filed a foreign corporation 
certificate on October 18, 1974. 1A4 In order to have a contract that was 
executed after PCM registered as a foreign corporation, one (and perhaps more) of 
the original 1974 contracts was (were) retyped and executed on January 28, 
1975. 1Zt5 PCM then submitted invoices under that (those) contract(s), and 
Treasurer Duffy again refused payemnt. 14 ^ 

The matter came to a head when Duffy filed a petition for a declaratory 
judgment in Superior Court, to determine the legality of an order of payment to 



138 Shields testimony, Sp. Comm. 6/5/80 at 44. 

139 id. See , e.g. , copies of PCM invoices dated June 25, August 12, August 
13, and October 10, 1974. 

140 See Decision and Order for Judgment , Duffy - v . Burxe , at 1. 

141 Roland Corneau, "Duffy refuses to pay N.Y. firm," Salem Evening News, 
November 4, 1974 at 1. Harding testimony, Sp . Comm. 6/4/80 at 82-83. 

142 Harding testimony, Sp. Comm. 6/4/80 at 80-81. 

143 g.L. c. 181 s. 9 See letter dated November 19, 1974 from Essex County 
Attorney W. Barrv MacDonald to Essex Countv Commissioners Chairman Edward H. 
Cahill re: validity of 6/4/74 contract between Essex County and PCM. 

144 Foreign Corporation Certificate dated OctoDer 18, 1974, filed by Project 
Construction Management, Inc. See Harding testimony, Sp . Comm. 6/4/80 at 81. 

^5 Minutes of Essex County Commissioners, January 28, 1975. Document headed 
"Basic Services," dated January 28, 1975, signed by Commissioners Daniel J. 
Burke, Katherine M. Donovan, and Edward H. Cahill, and for PCM, William F. 
Harding and John Malesko. 

146 "Agreed Statement of Facts" in Decision and Order for Judgment, Tnomas F. 
Duf f v v. Daniel Burke petals (Super. Ct . Essex Co., No. 2631, 1976) at 5. 



- 267 - 

PCM made by the Essex County Commissioners. Justice Francis J. Good ruled 14 
on October 20, 1976 that -- 

"The contract of January 28, 1975, between [the Essex 
County] Commissioners and P. CM., Inc., is null and void and 
of no legal consequence and there is no sum due from the 
county nor the Treasurer to said P. CM., Inc., for services 
rendered in reliance upon saio contract." 

In reaching this ruling, Justice Good explained : 1 4e 

"[A]s far as I have been able to determine, PCM has never 
undertaken to assume the authority to control or supervise tne 
construction of this courthouse. They have been present as an 
extra cog in the scene of the construction and at no time have 
they asserted authority to change, add or subtract something 
to the contract with the expectation that anyone had to pay 
attention to them. 



"... I find that PCM 
receiving a fee of uo 



.is having a free ride on the way 
to receiving a fee of uo to 3% of the total cost of the 
construction contract.... PCM's advice and/or 
suggest ions ... serve no useful purpose and play no part in the 
construction project at all and are completely superfluous. 

"Indeed, I find, as well, that at its best, PCM's 
activity amounts to a needless and wasteful duplication of 
time and expense with reference to the consultant wotk 
performed by the Architect hired Dy the [BBC] Director for and 
in behalf of the B. B. C . . . 

"... PCM has no authority to act at all. I am unaole to 
sav that the taxpayers' interests would be served and their 
money saved by this astonishing conduct of the Commissioners 
in their efforts to add to the cost of the courthouse the cost 
of the services of PCM to the Commissioners with reference to 
a contract [i.e., the architectural contract between the BBC 
and the architect] to which neither [i.e., PCM or the 
Commissioners] is a party and neither has any rights or 
obligations thereunder." 



PCM appealed the judgment of Justice Good but lost the appeal 



149 



Thus , even 



though PCM apparently did some work on the project, which even BBC engineer 
SanClemente conceded was of some value , ^->0 



147 Decision and Order for Judgment, Tnomas F. Duffy v. Daniel Burke, et al 

148 Id. at 9-10, 12-13. 

149 Interview of Adek Apfelbaum by Commission staff. 

150 Testimony of Robert SanClemente, Sp. Comm. 6/4/80 at 16-17. 



at 14 



- 268 - 

PCM never received a penny from Essex County. 151 

Moreover, the PCM contracts were costly to both Shields and Harding in other 
ways. MBM President McKee learned of the contracts and Shields's role in PCM 
and promptly terminated the severance/"consulting" payments from MBM to 
Shields. 152 And Harding -- who had charged Essex County sales trips for PCM 
to Harding's MBM expense account -- was discharged by MBM. 153 



151 Harding testimony, Sp. Comm. 6M/80 at 83. 

152 See Memorandum ("Confidential") dated April 30, 1975 from "Jerry" [Gerald 
McKee, Jr.] to MBM officer Stanley Emerson. Letter dated December 30, 1974 from 
D.W. Zeigler to Arnold Stream, Esq. re: Daniel J. Shields. 

153 See MBM payroll ledger card for William F. Harding. 



- 269 - 



CHAPTER XI 



CONCLUSION 



The Commission believes that certain witnesses failed to testify truthfully 
in matters before it, before the Post Audit Subcommittee, before the Superior 
Court in the Manzi-Masiello trial, and before the United States District Court in 
the DiCarlo-MacKenzie trial. The Commission has decided, however, as a matter of 
policy, not to make formal referrals for prosecution on any of these potential 
perjury cases. 

It is the sense of the Commission that the MBM case must come to an end. 
While false testimony may have been given within unexpired limitations periods, 
it relates to events that occurred far beyond any applicable limitations period, 
and the Commission believes that the matter should be put to rest rather than 
rehashed indefinitely. It is hoped that the exposure of the pattern of abuses, 
as well as the changes that have been made in the contract-awarding process, 
will deter others from engaging in such activities. The evidence is clear enough, 
the facts are set forth fully in this Report, the inferences are left to the reader 
The public policy in bringing the MBM affair to an end outweighs the 
benefits of further proceedings, in the Commission's view. 



APPENDICES 



- 1 - 

APPENDIX A 



THE FEE ARRANGEMENT 
EETWEEN MBM AND THE PEABODY FIRM 



Contemporaneous documents and testimony of Jeremiah Lambert indicate 
that MBM ' s initial agreement with the Peabody law firm (effective September 1, 
1569) called for MEM to pay a retainer of $800 per month, plus reimbursement of 
out-of-pocket expenses ( e.g . , travel, postage, photocopying) incurred on MEM's 
behalf by the Peabody firm. This was a continuation of the fee arrangement that 

■7 

had existed between MBM and Lambert's prior firm, Drew & Lambert.'' 

A special fee agreement was superimposed on top of the $800 monthly retainer, 
however, to compensate the Peabody firm for former Governor Peabody's assistance 
in regard to the UMass/Boston contract. Although MBM continued to pay a monthly 
retainer, MBM also apparently agreed that if Peabody's services helped MBM to 
obtain the UMass/Boston contract, MBM would pay to the Peabody firm a percentage 
of whatever MBM ultimately received from the Commonwealth on the UMass/Boston 
contract . 

At first, MBM- apparently agreed to pay 1 percent of its contract proceeds to 
the Peabody firm. At some time in December 1969, however, the percentage 
apparently was negotiated down to 1/2 of 1 percent. 

Since the precise fee arrangement has been the subject of considerable 
dispute and has important ramifications, it seems appropriate to discuss it in 
some detail. After a consideration of the fee arrangement itself, an explanation 
will be given of its significance. 

The Percentaoe Fee Acreement. The documentary evidence that MEM and the 

— — - 

Peabooy firm had a percentage arrangement regarding the UMass/Boston contract is 
rather extensive. MEM was formally selected to receive the UMass/Boston project 



1 Statements dated September 30, 1969, October 31, 1969, November 25, 1969, 
December 26, 1969 from the Peabody law firm to MBM; memorandum dated December 26, 
1969 from Jeremiah D. Lambert to "Jack" [presumably MBM comptroller Jack 
Lifschitz ] . 

2 Testimony of Jeremiah D. Lambert, Sp. Comm. 6/18/80 at 25-28. 

3 Id. at 25-26. 

4 Memorandum dated February 17, 1970 from "Gov. Peabody" to "Mr. Lambert," re: 
"MEM Fee - University of Massachusetts." 

5 id. 

6 Id . See also letter dated December 26, 1965 frcm Jeremiah D. Lambert to 
Gerald J. [ sic ] McKee, Jr. and other documents discussed below. 



- 2 - 
management job on December 22, 1969. Two days later, Peabody, Lambert, and 
MBM officials met in New York. Fart of the substance of that meeting was 
recorded in a letter which Lambert wrote to McKee to "summarize our understanding 

o 

of the revised fee arrangements we discussed on [December 24, 1969]."' The 

letter said, in pertinent part: 

"For services rendered in connection with obtaining the 
construction management contract with the University of 
Massachusetts, the [Peabody] firm is to receive a lump sum fee 
of $17,500 upon MBM ■ s execution of a final contract document, 
based or, the presently anticipated size of the contract . " 
[Emphasis added . J 

An MBM memorandum apparently sent by McKee to MBM comptroller Jack Lifschitz in 

January 1970*° elaborated on the fee agreement: 

"The fee arrangement as set forth in Lambert's letter of 
December 26th correctly represents our agreement with his firm. 

" Note . The $17,500 lump sum fee assumes a total contract 
value of $3,500,000 and should be scaled down if, as now 
appears, the project will be somewhat less than this amount." 

A fee of $17,500 would, of course, equal 1/2 of 1 percent cf a contract value 
of $3,500,000. Other documents support the view that this percentage basis was 
used . 

For example, in February 1970 Peabody wrote a memorandum to his partner 
Lambert, discussing the fee: 

"As I remember, we agreed that a fee equal to 1 percent 
of the gross on this matter would be reasonable, but we were 
willing to take one-half percent in view of the continuing 
retainer . 

"I understand that the proposal of MBM ... [to the 
Commonwealth of Massachusetts for a total contract value of] 
$3.5 million, is acceptable. Indeed, it may now be a 
contract. Thus our fee will be $17,500.00 or close to it. 

"In view of the fact that MBM is currently receiving 
compensation under the contract, whether or not it has been 
sicnec, I think they should start making payments this month 
toward that fee. I certainly could use my share and I am sure 
you could use yours." 



7 Letter aated December 22, 1969 from A&F Commissioner Donald P. Dwight to EEC 
Director Walter Poitrast, announcing award of Project U67-4 #2A (project 
management services for UMass/Boston) to MBM. 

8 December 24, 1969 entries for attorneys "EP" [Endicott Peabody] and "JDL" 
[Jeremiah C. Lambert] on MBM tub card II of the Peabody law firm. The Peabody 
law firm called its clients' ledger records "tub cards." Peabody testimony, P. A, 
3/7/76 at 112. 

5 Letter dated December 26, 1969 from Jeremiah D. Lambert to Gerald J. [ sic ] 
McKee, Jr. re: "revised fee arrangements." 

1D Memorandum dated January IS, 1970 to Jack Lifschitz re: Peabody firm's fee 
for UMass/Boston work. 

11 Peabody 2/17/70 memorandum to Lambert. 



- 3 



If Peabody's recitation of the fee arrangement was correct, then it would 

appear that the original agreement on a figure of 1 percent must have been 

reached before MBM was awarded the contract, since the final agreement on a 

figure of 1/2 of 1 percent was apparently reached no later than December 24, 

1969 -- just two days after MEM was formally awarded the contract. 

Lambert took up Peabody's suggestion that MBM be pressed to start paying the 

"UMass fee" immediately. In a letter dated February 26, 1970 to McKee, 

Lambert wrote, in pertinent part: 

"[T]here is the matter of the lump sum fee which you, Chub and 
I discussed in late December with respect tc the University of 
Massachusetts contract. Since this contract appears to be 
moving forward, we are hopeful that we can receive all or a 
substantial portion of the agreed amount, which was estimated 
to be $17,500." [Emphasis added.] 

On May 14, 1970, Lambert wrote another letter to McKee, to "confirm our 

recent discussion with you regarding our fee in respect of the University of 

Massachusetts contract." According to this letter by Lambert: 

"1. We will receive $17,500 in three monthly installments 
commencing May, 1970. (We have already received the first of 
these. ) 

"2. We will also receive an incremental fee calculated by 
multiplying MBM ' s actual contract proceeds (i.e., fee and 
reimbursables ) by 1/2 percent less $7,500 (thus in effect 
putting us $10,000 ahead), with payment of incremental fee 
amounts to be made quarterly." 



12 in testimony before the Commission, Lambert stated that he took no steps in 
1970 to tell Peabody that Peabody's understanding as expressed in the above 

Lambert testimony, Sp. Comm. 6/18/80 at 54-56. 



memorandum was incorrect 



13 

spec 
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I* Letter 
McKee, Jr. 

15 Letter 
McKee, Jr. 



dated February 26, 197C from Jeremiah D 
re: UMass fee. 



Lambert to Gerald J. [sic] 



dated May 
re: UMass 



14, 

fee 



1970 from Jeremiah D. Lambert to Gerald J. [sic] 



- A - 

The reason for this arrangement appeared in a handwritten note from Peabody to 

Lambert, 6 apparently Peabody's comments on a draft of this May 14 letter; the 

note read, in pertinent part: 

"What McKee said was that they wanted to keep $10,000 
ahead on fees. 

"For example assuming he paid us $10,000 now and on 
July 1 $7,500 worth of fees had been accrued based on 
amounts paid by the Commonwealth $7,500 would be due us." 

McKee responded by a letter to Lambert 17 which contained McKee's 

"recollection of our agreement for the U/Mass fee." McKee said that he was "not 

sure that it is really any different from your May 14th letter, but if it is I 

should like to discuss it with you." According to McKee, the agreement was as 

follows : 



"1. Your fee will be 1/2% of all contract proceeds. 

"2. We will pay, on account of this, a total of $17,500 in 
three monthly payments. 

"3. When proceeds reach $1,500,000 you will have been paid 
$7,500, representing 1/2 of 1% of proceeds plus a 
'retainer' of $10,000 applicable against future proceeds 
payments . 

"4. Each month subsequent to the date when proceeds reach 

$1,500,000, you will be paid 1/2% of the month's proceeds. 

"5. The 'retainers' will be liquidated at the end of the 

UMass involvement such that total payments to you will 
not have been more than 1/2 of 1%." 

Lambert apparently agreed with McKee's summary, since Lambert referred to it 

in a November 23, 1970 letter to MBM comptroller Samuel N. Beckerman. e In 

that letter Lambert acknowledged that the Peabody firm had been paid the 

installments totalling $17,50C and reminded Beckermsn that the Peabody firm was 

to receive additional amounts, eoual to 1/2 of 1 percent of each month's proceeds 

that MBM was receivinc frorr the Commonwealth fcr the UMess/Ecston contract. 



1£ Handwritten memorandum undated [but on or before May 14, 1970] from "Chub" 
[Endicott Peabody] to "Jerry" [Jeremiah D. Lambert], concerning fees. 

I? Letter dated August 14, 1970 from Gerald McKee, Jr. to J[eremiah] D. 
Lambert re: "UMass fee," at 1-2. 

18 Letter dated November 23, 1970 from Jeremiah D. Lambert to Samuel N. 
Beckerman. (Beckerman had succeeded Jack Lifschitz as MBM comptroller.) 



- 5 - 
Lambert asked Beckerman to "advise me where matters stand and whether any further 
payment is now due[.]" Eeckerman replied that MBM ' s accrued receipts on the 
contract stood at $1,267,363. He concluded, " I t will be seen therefore, that at 
the present time, no additional fees are yet payable, since the contract proceeds 

1 9 
have not yet exceeded $1.5 million. v± 

It soon became clear that MBM would receive more than $3,500,000 from the 

Commonwealth for the UMass/Boston contract, and Lambert quickly saw to it that 

the Peabody firm would receive its 1/2 of 1 percent of this larger amount. 



Accordinc to a March 24, 1571 memorandum 



20 



"1. The present U/Mass fee arrangements contemplate an 
aggregate fee equal to 1/2 of 1 percent of total contract 
proceeds. Predicated on $4.5 million of such proceeds, PRC&L 
[the Peabody law firm]'s fee will be $22,500. Of this amount, 
$17,500 has already been paid. PRC&L is therefore to submit 
an invoice in the amount of $5,000 after 4/30/71 to cover the 
excess . 



"5. As to item 1 above, Phase II proceeds -- and the fee 
which may be due to PRC&L in respect thereof -- will be 
handled by gentlemen's agreement, i.e. , if there is a Phase 
II, PRC&L fee will be adjusted to reflect additional proceeds 
to MBM on presently understood proportional or percentage 
basis, expressed eventually as fixed fee." 

On May 5, 1571, Lambert sent a letter to McKee reminding McKee that the 

additional $5,000 had been agreed upon, and enclosing a statement covering 

21 22 

it. That amount was paid in 1572. 

Despite these contemporaneous documents, Messrs. Lambert and Peabody later 

denied that there was a percentage arrangement between MBM and the Peabody firm. 

For example, on May 25, 1578, Lambert wrote a letter to Charles R. Nesson, counsel 



19 Letter aated December 15, 1570, from Samuel N. Eeckerman to Jeremiah D. 
Lambert . 

20 "Memorandum of Discussions Between GM [presumably Gerald McKee, Jr.] and 
JDL [presumably Jeremiah D. Lambert], 3/24/71." 

21 Letter dated May 5, 1571 from Jeremiah D. Lambert to Gerald J. [ sic ] McKee, 
Jr. with enclosures. 

22 Lambert testified that the $5,000 payment in question was received in 
January 1972. Lambert testimony, Sp. Comm. 6/16/80 at 73. There is some 
ambiguity about the total fee paid by MBM to the Peabody law firm. Peabody 
testified in 1578 that his firm had been paid $27,500. Peabody testimony, P. A. 
3/7/78 at 110. Furthermore, a letter dated June 26, 1572 from Jeremiah D. 
Lambert to Andrew H. Serell states that as of May 31, 1572 MBM still owed the 
Peabody firm the $5,000 "UMass fee," as well as other accrued fees. 



to the Post Audit Subcommittee, regarding the fees received by the Peabody law 

23 
firm from MBM in connection with the UMass/Boston contract. In that letter, 

Lambert wrote that he had "discussed this letter with Governor Peabody, who 

concurs in its findings." Although the letter went on at considerable length, at 

no point did it make any mention of a percentage arrangement. 

Nesson was not satisfied with Lambert's "findings," as he made clear in a letter 

dated June 6, 1978 from Nesson to Peabody 's/Lambert ' s lawyer, Morris M. 



Goldinas 



24 



Nesson wrote, in part: 



"I am in receipt of Mr. Lambert's letter of May 25, 1978, 
and do not consider it a satisfactory response to the 
inquiries which were made of you. 

"You will recall that my inquiry stem[m]ed from an entry 
on one of Governor Peabody's tub sheets which indicated that 
in calculating a monthly fee, Governor Peabody apparently 
included a dollar amount described as 'U. Mass fee.' I wanted 
to know whether that represented a portion of a larger fixed 
fee or of a percentage fee. 

"In a subsequent meeting with you, you indicated that Mr. 
Lambert and Governor Peabody had consulted their records and 
that there had been at one time a percentage fee arrangement 
with MBM with respect to the U. Mass project. You indicated 
further that it was the intention of Mr. Lambert and Governor 
Peabody to describe that arrangement in a letter to the 
Committee . 

"The letter which has been provided to the Committee 
obviously ooes not contain any such description or 
explanation. You have indicated to me that the reason for 
this is that when the letter of explanation was shown to 
Gerald McKee, he objected to Mr. Lambert and Governor Peabody 
providing the explanation to the Post Audit Committee, basing 
his objection on attorney-client privilege. 

"Mr. McKee, on behalf of MBM, has clearly waived the 
privilege...." 

Nesson's letter prompted a letter dated June 7, 1978 from Lambert to Nesson 

Lambert wrote, in pertinent part: 



^ Letter dated May 25, 1978 from Jeremiah D. Lambert to Charles R. Nesson. 
2A Letter dated June 6, 1978 from Charles R, Nesson to Morris [M.] Goldings 
25 Letter dated June 7, 1978 from Jeremiah D. Lambert to Charles R. Nesson. 



- 7 - 

"Our counsel, Morris Goldings, has transmitted to us the text 
of your letter dated June 6, 1978, in response to my letter 
dated May 25, 1978. 

"I have since had an opportunity to discuss this matter 
briefly by telephone with Mr. McKee.... He emphasizes that he 
is not seeking to assert attorney-client privilege to deny the 
Committee information expressly concerning U/Mass fees paid by 
MBM to this firm. . . . 



"Our fee arrangements with MBM were subject to continuing 
discussions over a period of almost one year. In late 
December, 1969, after MBM had been selected by the Designer 
Selection Board but before [MBM] had entered into the U/Mass 
contract, our arrangements with MBM contemplated a lump sum 
fee of $17,500 for all legal services related to contract 
formation. Subseguent discussions concerned the manner in 
which this fee was to be paid and the possibility of adjusting 
it upward to take into account MBM's revenues actually 
received under the contract. At those discussions, it was 
agreed that in no event was our fee to exceed 1/2% of MBM's 
contract revenues . 

"In fact, payments of the U/Mass fee were made in the 
following amounts and on the following dates: 

"$5,833.00 May 5, 1970 

"$5,833.00 June 2, 1970 

"$5,834.00 July 6, 1970 

"$5,000.00 January 22, 1972 

" The total amount actually received in respect of the U/Mass 
fee was thus $22,500. That amount was not in fact determined 
as a percentage of MBM's contract revenues ; nor did it exceed 
the percentage limitation previously noted. As paid, it 
reflected nothing more nor less than a negotiated and 
liauidated amount for our legal services in connection with 
the formation of the U/Mass contract." [Emphasis added.] 

In addition to Lambert's written denials of a percentage-based arrangement, 

Lambert also denied in testimony to the Commission in 1980 that there was an 

agreement, prior to MBM's selection as UMass/Boston project manager, such that 

the Peabody firm's fee would vary depending upon, or be calculated as a 

percentage of, MBM's actual receipts from the UMass/Eoston project, Former 

Governor Peabody then indicated that he had not paid much attention (in 1969-72) 

to the fee arrangement and that he would defer to the substance of Lambert's 

testimony before the Commission. 



26 Lambert testimony, Sp. Comm. 6/18/80 at 35-37, 40-44, 51-55, 60-62, 66. 

27 Peabody testimony, Sp. Comm. 6/19/8C at 29. 



- 8 - 
Moreover, former Governor Peabody went to considerable effort to try to deny 
to the Commission the documents quoted from above as well as many other 
documents. Peabody was asked, both orally on March 26, 1979 and May 16, 

op 

1979, D and in writing on June 13, 1979, to produce the documents 

29 
voluntarily. When he refused, the Commission issued a summons specifically 

covering those documents.'' Former Governor Feabody refused to comply with the 

summons, and instituted a court proceeding in which he attempted to ouash the 

summons and, indeed, to obtain a court ruling that the Commission could not 

continue any of its investigations. The Massachusetts Supreme Judicial Court 

unanimously rejected Peabody's arguments and ordered him to produce the documents 

32 
to the Commission forthwith. 

Before a discussion of the significance of the Peabody firm's receiving a 
percentage fee, it may be worthwhile to consider whether the Peabody firm's UMass 
fee was contingent in nature. 

The Contingent Nature of the Fee . Mr. Lambert has testified that the fee 
arrangement with MBM was "in no sense contingent." 

In the context of attorney and client, the term "contingent fee" has been 
defined as an arrangement between attorney and client whereby the attorney agrees 



26 File memorandum dated April 3, 1979 by Commission attorney Michael L. Tabak 
re: "Telephone Conference with Morris Goldings, Eso." Letter dated June 13, 1979 
from Commission attorneys Michael L. Tabak and A. John Pappalardo to Endicott 
Feabody and Jeremiah D. Lambert with attachment. 

29 Tabak and Pappalardo 6/13/79 letter to Peabody and Lambert. 

30 Massachusetts Special Commission Concerning State and County Buildings, 
Summons to Endicott Peabody, dated and served October 12, 1979. 

51 Motion to Quash or Limit Summons, and Reouest for Hearing Thereon, In the 
Matter of Endicott Feabody, filed with Commonwealth of Massachusetts Special 
Commission Concerning State and County Buildings, on October 22, 1979. 

32 were v. Feabody No. SJC-2072 (Mass., February 14, 1980). (Croer that the 
summons be enforced.) 

33 Lambert testimony, Sp. Comm. 6/16/80 at 98-101, 108. 



- 9 - 

to represent the client with the attorney's compensation to be a percentage of 
the amount received by the client. Since the Peaboby firm's agreement with 
MBM was that the Peabody firm would be paid 1/2 of 1 percent of whatever MBM 
received on the UMass/Boston contract, it would seem clear that the Peabody firm 
had a contingent fee arrangement with MBM. 

Not only was the amount of the Peabody firm's fee contingent, but it appears 
that a contingency determined whether the Peabody firm would receive any fee at 
all (other than its normal retainer) for helping MBM with the UMass/Eoston 
contract: it appears that the Peabody firm would receive a large "UMass fee" if 
its efforts helped MBM win the job, but it would receive nothing above its normal 
monthly retainer if MBM did not win the UMass/Boston contract. 

Both Peabody and Lambert denied that the Peabody firm would have received 
nothing above its normal monthly retainer if MBM did not win the UMass/Boston 
contract. They did not, however, direct the Commission to any documents or 
other evidence supporting their testimony on this point. 

But there are reasons to believe that the Peabody firm would have received 
only its normal monthly fee -- and nothing extra -- if MBM had not won the 
contract. For example, there were other contracts in Massachusetts that Peabody 
tried to help MBM obtain during the period 197C-1972, while the percentage 
arrangement was still continuing with respect to the UMass/Boston contract and 
was still expected to apply if MBM obtained Phase II of the UMass/Boston job. In 
no instance where MBM failed to obtain a contract, did the Peabody firm bill for 
or receive payment above the normal monthly retainer, so far as the Commission 
can determine. Moreover, as to the UMass/Boston job, the numerous MBM-Peabody 
documents which discussed fees were auite specific, and they made no mention of 
any extra fee that the Peabody firm would receive, above its normal monthly 
retainer, if MBM failed to win the contract. 



34 See Elack's Law Dictionary (5th ed.) at 553. 

35 Lambert testimony, Sp. Comm. 6/18/80 at 101-102; Peabody testimony, Sp 
Comm. 6/19/80 at 34-35. 



- 10 - 

If MBM had not won the UMass/Boston contract, any extra payment for Peabody's 
work should have been minimal. Peabody devoted only 31 hours of billable time to 
all MBM matters during the three-month period in which MBM was trying to win the 
UMass/Boston job. Since Peabody's billing rate to MBM was no more than $50 
per hour at the time, Peabody's services in trying to obtain the UMass/Boston 
contract for MBM would have been worth at most $1550. Of course, the normal 
monthly retainers paid by MBM to the Peabody firm would have covered much or all 
of that. 

In contrast, when MBM won the UMass/Boston contract, the Peabody firm 
received a special $22,500 fee. The extra $22,500 that the Peabody firm received 
for helping MBM obtain the contract is equivalent to $725 per hour for the time 
Peabody spent on the matter — approximately fifteen (15) times Peabody's regular 

38 

rate as a lawyer. 

The Significance of the Pee Arrangement . Why did Messrs. Lambert and Peabody 
go to such lengths tc deny (1) that their fee was to be determined on a 
percentage basis and (2) that their fee was contingent? The Commission expresses 
no views as to the reasoning or motivation of Peabody or Lambert. There are, 
however, some additional documents that are interesting in this regard -- 
documents that the Commission obtained pursuant tc court order, after former 
Governor Peabody's objections to the Commission's summons were overruled by the 
Massachusetts Supreme Judicial Court. 



36 Peabody law firm MEM tub cards I and II, fcr period 10/1/69 through 
12/22/65. 

^ 7 Lambert testimony, Sp. Comm. 6/1S/8C at 71. 

3£ This calculation chanoes little even if it is assumed that Lambert spent 
some time in regard to obtaining the UMass/Boston contract fcr MEM. Of course, 
there is no reason tc assume that Lambert did spend much time on the matter. 
Cf. Lambert testimony, Sp. Comm. 6/18/80 at 64. 



- 11 - 

The first document is dated February 10, 1971 -- less than a week after MBM 

and the Peabody firm became aware of a series of news articles criticizing MBM's 

UMass/Boston contract and calling for a legislative investigation. 39 The 

document is a memorandum u from Jeremiah Lambert to an attorney named Rooer M. 

Golden who worked for the Peabody law firm. Identified as being "Re: MBM," 

Lambert's memorandum said: 

"This will confirm my request that you investigate the 
applicable Massachusetts law concerning disclosure by a 
contractor with the Commonwealth of the identity of persons 
with a 'financial interest' in the contract. 



"You should seek to find an answer to the question whether 
fees paid to counsel for the contractor in connection with 
negotiating and arranging the contract constitute a 'financial 
interest 1 subject to disclosure and should distinguish, if 
such a distinction is indicated by law, between lump sum fees 
and fees which are expressed, either in whole or in part, as a 
function of the contract amount. 

"Check also periodical literature which may deal with the 
Massachusetts statute or any related statutory provision as 
well as the equivalent provisions of Federal procurement law 
with respect to contingent fees and the payment of fees for 
the obtaining of a Government contract. 

"Please prepare a concise memorandum of your finding for the 
Governor and for me." 

Lambert sent a copy of this memorandum to former Governor Peabody. 

Golden researched the matter and sent a memorandum dated February 16, 1971 to 

Lambert "Re: Fee Arrangement with MBM." Golden began by auoting a 

Massachusetts statute:^ 



"No contract to provide consultant services shall be 
awarded by the Commonwealth, or by any department, board, 
commission or other agency acting in its behalf, unless the 
person signing such contact on behalf of the party contracting 
to provide such services files with the comptroller a 
statement under the penalties of perjury setting forth the 
names and adcresses of all persons having a financial interest 
therein not including, however, any person whose only 
financial interest therein consists of the holding of one per 
cent or less of the capital stock of a corporation contracting 
to provide such services." [Emphasis added.] 



39 See Chapter VII. 

4° Memorandum dated February 10, 1971 from " J.D.L." [Jeremiah D. Lambert] to 
"R.M.G." [Roger M. Golden] re: MBM. 

41 Memorandum dated February 16, 1971 from "RMG" [Roger M. Gclden] tc "JDL" 
[Jeremiah D. Lambert], re: "Fee Arrangement with MBM." 

A2 G.L. c.7 S.14A. 



- 12 - 

Golden reported that he could find no legislative history for this disclosure 
statute and no cases in point. He did, however, find a formal opinion by the 
Massachusetts Attorney General in 1964 stating that, irrespective of the size of 
the corporation involved, or of the difficulties of obtaining the information 
required, the provisions of the statute " must be complied with in every case ." 
[Emphasis added. ]^ 3 

Golden did not mention in his final written memorandum to Lambert that the 
Attorney General's Opinion also said: "Clearly, the object of the [statutory] 
provision is the identification of parties financially interested in the contract 
who otherwise might remain anonymous .... [W ]here an agreement exists for the 
payment of an agent's fee or commission in connection with the contract, 
disclosure of this fact would be necessary ." [Emphasis added.] 

Golden did suggest that the Peabody firm consider "adopting the position that 
we do have a 'financial interest' in the contract in auestion." But, Golden 
hastened to observe, "this approach must of course be balanced against any 
Detrimental effects from being listed as such a person within the meaning of [the 
statute]." Thus, Golden appears to have been saying that it would be prudent 
from a strictly legal point of view for the Peabody firm to agree to be listed as 
having a financial interest in MEM's UMass/Boston contract, but that the Peabody 
firm should consider from a practical point of view whether it wanted to be 
identified as having a financial interest in a contract that might soon come 
under investigation by a Massachusetts legislative committee. 

The Peabody firm, having considered Golden's memorandum, did not make or 
cause any disclosure of having a financial interest in the MBM-Mass/Boston 



42 Golden 2/16/71 memorandum to Lambert, at 2, summarizing 1963-64 Op. PG 222. 

44 1563-1964 Op. AG 222, Application of Chapter 644 of the Acts of 1563, 
specifically the term "financial interest." 

4^ Golden 2/16/71 memorandum to Lambert, at 6. 

46 Id. 

47 Lambert testified that he read and considered the memorandum. Lambert 
testimony, Sp. Comm. 6/18/80 at 89. In Lambert's February 10, 1971 memorandum of 
instructions to Golden, Lambert said that the Golden memorandum was to be for 
Lambert and Peabody. Lambert 2/10/71 memorandum to Golden. 



13 - 



48 



contract .' 

Golden's memorandum considered not only whether the fee arrangement between 
the Peabody firm and MBM had to be disclosed but also whether the fee arrangement 

AC 

was illegal unoer Massachusetts law. Golden noted that "Federal procurement 

law is Quite clear in its general prohibition against a contingent fee 

arrangement in connection with obtaining a government contract. 10 U.S.C.A. 

s. 306(b) provides: 

"'Each contract negotiated under section 2304 of this 
title shall contain a warranty, determined to be suitable by 
the head of the agency, that the contractor has employed or 
retained no person or selling agency to solicit or obtain the 
contract under an understanding or agreement for a commission, 
percentage, brokerage, or contingent fee , except a bona fide 
employee or established commercial or selling agency 
maintained by him to obtain business. If a contractor breaks 
such a warranty the United States may annul the contract 
without liability or may deduct the commission, percentage, 
brokerage, or contingent fee from the contract price or 
consideration.'" [Emphasis added.] 

"And," Golden continued, "it has been held that this prohibition is founded upon 

'strong national policy.' Acme Process Equipment Co. v. United States , 347 F . 2d 

538, 552 (Ct. CI. 1965), mot. den. 351 F.2d 656 (Ct. CI. 1965). " 50 Thus, 

Golden pointed out, "the Question is whether Massachusetts, in the absence of its 

own statutory provisions, has adopted the federal law, and therefore whether a 

contingent fee arrangement in connection with solicitation of a public contract 

c -I 

is against public policy in the Commonwealth.'"' 

After some analytical discussion, Golden concluded that "the rule in 
Massachusetts would seem to be that a contingent fee arrangement is not per se 
illegal. It is merely one factor to be considered in determining whether a given 



4& It may be noted in this connection that MBM's UMass/Eoston project 
management contract was specifically determined to be a consultant contract 
requiring compliance with G.L. c.7 S.14A. See letter dated October 6, 1971 from 
Assistant Attorney General Frederick J. Sheehan to Senator Joseph J. C. DiCarlc, 
concerning the approval of the MBM-BEC contract no. 601 as to form; this letter 
appears in Commonwealth of Massachusetts, House No. 5006 dated January 10, 1971 
[ i.e . 1972], Report of the Joint Special Committee [DiCarlo-Siri anni Committee] 
relative to the construction of the University of Massachusetts, Boston at 
Columbia Point, at 40-41. 

49 Golden 2/16/71 memorandum to Lambert, at 2-6 . 

50 lti^ at 3. 

51 Id. at 4. 



- 14 - 

contract is consistent with the public policy of the Commonwealth." 52 

There is at least one other circumstance which may have some relationship to 

the denial by Lambert and Peabody that their fee was a percentage fee or a 

contingent fee. During the course of the 1971 DiCarlo-Sirianni Committee 

investigation into MBM, which is discussed in Chapter VII above, it became 

apparent that McKee or other MBM officials might be required to testify before 

the DiCarlo-Sirianni legislative investigating committee. 

A letter dated June 11, 1971 from Lambert to McKee, 54 obtained by the 

Commission pursuant to summons and court order, says: 

"As you requested today, I am enclosing a form of response to 
the hypothetical question you posed concerning fee 
arrangements . " 

Entitled "Response to Hypothetical Question Posed by Investigative Committee 

Concerning Fee Arrangements Eetween PRC&L [the Peabody law firm] and MBM," this 

document -- apparently written or approved by Lambert -- suggested that McKee 

testify as follows (in pertinent part) if called upon to do so by the 

DiCarlo-Sirianni Committee: 

"Our [MBM's] present arrangements with the [Peabody] firm 
provide for the payment of a monthly retainer for general 
representation. These arrangements have been in effect for 
some time and commenced before the date of award of the 
subject contract [the UMass/Boston contract]. In recognition 
of the [Peabody] firm's work on behalf of MBM (in connection 
with the subject contract and otherwise), payments in excess 
of the basic retainer have been made from time to time. 
However, such payments were in no sense contingent; and the 
extra amounts paid have been determined in the context of a 
continuing relationship between attorney and client." 

Of course, as discussed above, the monthly retainer paid in 1969 was only $800, 

while the UMass/Boston fee was $22,500; Peabody's usual hourly billing rate was 

$50 or less, while the hourly billing rate implicit in the Feebody firm's UMass 



52 id. at 5. 

53 McKee did, in fact, testify to the DiCarlo-Sirianni committee on July 29, 
1971. 

54 Letter dated June 11, 1971 from Jeremiah D. Lambert to Gerald J. [ sic ] 
McKee, Jr. enclosing memorandum entitled "Response to Hypothetical Question Posed 
by Investigative Committee Concerning Fee Arrangements Between PRC&L and MBM." 



- 15 - 

fee was on the order of $725; and the Peabody firm's fee -- having been 
calculated as 1/2 of 1 percent of MBM's revenues -- would seem at least "in 
[some] sense contingent." 

Lambert presumably anticipated, when he sent the proposed answer to McKee, 
that McKee would be giving the answer while under oath, subject to the pains and 
penalties of perjury. 

When Lambert was asked about the fee arrangement in his appearance before the 
Commission, he concluded by stating: 5 ^ 



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lly so 

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tainly 



ent s 
e com 
ated 
s , me 
ave c 
s not 
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o tha 
the 
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o con 
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that 
uracy 

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peci 
plex 
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ause 

int 
rs, 
t th 
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orth 

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, I 



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ity 

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one 
ey w 

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ween 

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to Mr. 
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55 G.L. c.3 s.27. 

56 Lambert testimony, Sp. Comm. 6/18/8C at 128-129, 



- 16 - 

APPENDIX B 

EVIDENCE BEARING ON 
MBM'S ACTIVITIES IN 
OTHER STATES 

MBM President Gerald McKee, Jr. testified in federal court at the 
DiCarlo-MacKenzie trial in 1977. McKee said that MBM had paid $40,000 to DiCarlo 
and Mackenzie, and McKee described (without naming names of the recipients) that 
MBM had also given $10,000 to Manzi in October 1970; another $10,000 to Manzi in 
May 1972; $2,000 to Kevin Harrington and $2,000 to the Kevin White gubernatorial 
campaign in October 1970; $1,000 to James A. Kelly, Jr. in January 1972; and 
$2,000 to Frederick Kussman in January 1972. McKee gave explanations for 
these payments ( e.g. , some were extorted from MBM; others were tantamount to 
small gifts to friends) but emphasized that no quid pro ouos were involved. 

McKee then swore, under oath, that these were the only political payments 
that MBM made in Massachusetts during the years 1969 through 1972, and that MBM 
did not make any political payments anywhere else in the country during those 
years . 

In 1976, at the Post Audit Subcommittee hearings, McKee testified that he 
could not "put [his] finger on why [MBM] felt it was necessary to [make such 
payments in Massachusetts]," particularly since, in his words, MBM "managed tc 
avoid it in every other state in which [MBM] worked. 1 " 

In 1975, at the Manzi-Masiello trial in Massachusetts Superior Court, McKee 
was asked about testimony that MBM salesman William F. Harding had giver at the 
DiCarlo-MacKenzie trial to the effect that Harding had transported cash from MBM 
throughout the United States as political contributions. McKee swore, under 
oath, that Harding's testimony was untrue.^ 



1 McKee testimony, 6 DiC 2/1/77 at 52-53, 55-56. 

2 McKee testimony, 6 DiC 2/1/77 at 56. McKee did say that MBM's wholly-owned 
subsidiary MCM made $7,000 or $8,000 in indirect political payments in 
Philadelphia in 1972, but McKee claimed that he had not known about those 
payments until 1973, at which time he said he fired the responsible individuals 
McKee testimony, 6 DiC 2/1/77 at 183-185; P. A. 3/22/78 at 108. 

3 McKee testimony, P. A. 3/22/78 at 107-108. 

* Harding testimony, 13 DiC. 2/10/77 at 65-66. 
5 McKee testimony, 12 M/M 3/1/79 at 119-121. 



- 17 - 

McKee's testimony was echoed by MBM by Vice President Anthony Mansueto, who 
swcre that MBM did not use political influence to obtain contracts and that 
"[MEM] never did and we never will. ..hire any political people for 
contracts." Mansueto stated, under oath, that Massachusetts was the first 
place where he encountered the practice of politicians raising money from people 
doing business with the state -- a practice which Mansueto said he first learned 
about from Endicott Peabody in 1970 -- and Mansueto testified that MBM never made 
any political contributions outside Massachusetts. 

In order to evaluate this and other testimony by McKee and Mansueto 
(particularly the testimony that MBM did not obtain the UMass/Eoston contract in 
return for a commitment to make cash payments to the Sargent 

campaign/administration), it is necessary to consider the evidence that tends to 
contradict these categorical denials. Such evidence of activities in states 
other than Massachusetts is important also in terms of deciding whether it is 
McKee or Maurice Khoury who has told the truth about whether MBM had a nationwide 
policy of making cash payments tc political people in return for public 
contracts. In addition, evidence of MBM's activities in other states may shed 
some light on how MBM operated in Massachusetts in regard to the UMass/Eoston 
contract and other contracts. 

The Commission has obtained some concrete information about MBM activities in 
Pennsylvania, Illinois, Louisiana, and Maryland. That evidence is summarized in 
the following sections. The Commission heard uncorroborated allegations about 
MBM's activities in some other states, but that information is not being 
discussed in this Report because of its less certain nature. 

Pennsylvania . In 1571, MBM acauired Mauchly Construction Management, Inc. 
("MCM"), as has been discussed previously in this report.' MCM had applied for 
a $1.5 million contract at the Philadelphia International 



6 Mansueto testimony, P. A. 6/9/78 at 117; P. A. 5/23/78 at 110. 

7 Mansueto testimony, P. A. 5/23/78 at 44, 74, 118. 

8 Other testimony includes McKee testimony, Sp. Comm. 6/26/80 14-18, 97-102; 6 
DiC 2/1/77 at 187-189. Mansueto testimony, 9 DiC 2/4/77 at IOC; 10 DiC 2/7/77 at 
77-76, 117-118. 

° See discussion in Chapter II supra . 



- 18 - 



10 



Airport, u and MCM continued to press for the contract even after MCM had been 
acquired by MEM. 1 

MCM's application for the Philadelphia International Airport contract was 
being supported by Dr. Leon C. Nurock. Nurock, in addition to being an 
optometrist, was an active fundraiser for the Philadelphia Democratic City 
Committee . lz Nurock had been put on MCM's payroll as a "consultant" and had 
received at least $7,000 from MCM in 1570. ' MCM did receive some preliminary 
contracts from the airport, and MCM's March 17, 1971 check to Nurock 
contained the notation: "Dec. fee - airport job." 

When MCM was being acquired by MBM later in 1971, MCM President Shields 
introduced MBM President McKee to Nurock and to other such "consultants" from 
other states, so that McKee could determine whether to continue paying for those 
"consultants'" services. McKee and McKee's wife visited Nurock and Nurock's 

wife in New Hope, Pennsylvania, and McKee decided to continue utilizing 

1 p 

Nurock's services. 



10 See Mauchly Construction Management Proposal Listing, Pennysl vania , undated 
but probably summer 1971. 

H See MBM Monthly Marketing/Sales Summary dateo January 15, 1572, addendum 
for Mauchly Construction Management, at 4 . 

12 Notes of 7/26/75 interview of Leon C. Nurock by Special Commission staff, 
at 1. 

1- MCM checks dated 8/17/70 for $2,000, 9/14/70 for $1,000, 10/14/70 for 
$1,000, 10/16/70 for $2,000, and 12/3/7C for $1,000, all payable to Dr. Leon C. 
Nurock . 

14 MCM Job No. PMO-223 for construction management services valued at 

$126, 40C, awarded in June of 157C, with supplement valued at $8, IOC awarded in 
November 1570; MCM Job No. PMO-256 for cost control services valued at $16,305, 
awarded December 1570. 

15 MCM check #1564 dated March 17, 1571 for $1,000 payable to Dr. [Leon C.l 
Nurock . 

1£ Interview of Daniel J. Shields by Special Commission staff 3/5/80. 

1~ Notes of 6/18/79 interview of Gerald McKee, Jr. by Special Commission 
staff, at 6. 

Id . Nurock 7/26/75 interview, at 1-2; Shields 7/21/75 interview, at 3. 



- 19 - 

A Philadelphia Special Investigating Grand Jury looked into Nurock's 
activities in regard to the Philadelphia International Airport and made a 
detailed presentment which was made public. 9 According to that special grand 
jury, Nurock was the agent and "right-hand man" of Philadelphia Democratic City 
Committee Chairman Peter Camiel. As such, Nurock allegedly saw to it that 
the airport construction management contract, which was awarded in May 1972 to 

Meridian Engineering, Inc., was converted into a joint venture of Meridian and 

21 
MCM. At a meeting at which the terms of the joint venture were allegedly 

worked out, Nurock allegedly indicated by holding up five fingers that a five 



percent kickback would be due 



22 



This meeting allegedly occurred in June 1972, 



well after MCM was acouired by MBM 



23 



No indictment was ever returned aoainst 



Nurock, so far as the Commission knows, despite the recommendation of the special 
investigating grand jury. 

In 1972, during all of which MCM was a wholly-owned subsidiary of MBM, Nurock 

received $25,500 in "consulting fees" and $8,649.06 in "expense reimbursements" 

25 

from MCM. -" MCM also made three payments in 1972 to the Philadelphia Letter 

Shop, Inc. -- totalling $7,387.50 -- for expenses apparently incurred by the 



19 Philadelphia Special Investigating Grand Jury, June Term 1972, Twelfth 
Presentment, made public December 27, 1973. See Joseph R. Daughen, "Jury Wants 
Top Phila. Democrats Prosecuted for Political Blackmail," Philadelphia Eveninc 
Bulletin, December 27, 1973. 

20 Philadelphia Special Investigating Grand Jury, June Term 1972, Twelfth 
Presentment, at 15, citing testimony given under a grant of immunity by Thomas A, 
Graham, chairman of the board of Meridian Engineering, Inc. 

21 J^c. 

22 Jjj. at 15, citing testimony of Graham. 

2 3 Id. 

24 Id. at 23-24, 31; Nurock 7/26/79 interview, at 1. 

25 KCM check dated 1/19/72 for $2,000; checks for $750 each dated 1/5/72, 
1/19/72, 2/18/72, 2/29/72, 3/16/72, 3/29/72; checks for $1,000 each dated 
4/12/72, 4/22/72, 5/10/72, 5/25/72, 6/9/72, 6/20/72, 7/6/72, 7/19/72, 8/2/72, 
8/16/72, 8/30/72, 9/14/72, 9/28/72, 10/13/72, 10/27/72, 11/8/72, 11/22/72, 
12/8/72, 12/22/72; all checks payable to Dr. Leon C. Nurock. 



- 20 - 

Philadelphia Democratic City Committee. ° The foregoing payments were all made 
by MCM checks. 

In addition to these payments made directly by check, other payments 
allegedly were made in cash. According to MCM Comptroller Peter T. Pallotta, one 
such payment was $5,000 in cash which was generated by an MEM check signed by 
McKee in August 1972. 27 Pallotta said that he (Pallotta) delivered the cash to 
Nurock at the 30th Street train station in Philadelphia, and that the cash was 
allegedly to be used to meet the payroll of the Philadelphia Democratic City 

op 

Committee . 

On July 15, 1973, MCM President Daniel Shields — who had become MEM 
President in February 1973 (as McKee moved up to become President of MBM ■ s parent 
company, IMS) — was fired.'' Thereafter, Nurock and McKee met on October 
3, 1973 to discuss Nurock's continuing relationship with MEM. 1 According to 
Nurock, McKee was fully cognizant of the details of Nurock's previous arrangement 
with MBM/MCM and did not seem surprised at the amount of money already paid or 
owed to Nurock. z 

McKee wrote a memorandum for files dated October 4, 1973. The memorandum 
set forth the commitments that allegedly had been made to Nurock previously. 
According to McKee's memorandum, Nurock had said that he had been promised $2,000 
per month from June 1970 through December 1971; $1,500 per month throughout 1972; 



26 MCM check #420 dated November 27, 1972 for $1,557.50; #421 oated 
November 27, 1972 for $3,180; #422 dated November 27, 1972 for $2,650; all 
payable to the Philadelphia Letter Shop, Inc. See also McKee testimony, 6 DiC 
2/1/77 at 163-165. 

27 mbm check #4075 dated Auoust 17, 1972 for $5,000 payable to cash, signed by 
Gerald McKee, Jr. Notes of 7/25/7S interview of Peter T. Pallctta by Special 
Commission staff, at 19. 

26 Pallctta 7/25/79 interview, at 19; confidential information made available 
to the Special Commission. 

29 See discussion in Chapter II supra . 

30 See discussion in Chapter II supra . 

31 See Memorandum to files dated October 4, 1973, signed G. McK. [Gerald 
McKee, Jr.], re: "Meeting with Dr. Leon Nurock [on October 3, 1973], at 1. 

32 Nurock 7/26/79 interview, at 2. 

33 McKee 10/4/73 memorandum for files. 



- 21 - 

and $2,000 per month, plus expenses, for 1973. On top of those amounts, MBM had 
been paying $500 per month rent on Nurock's New Hope, Pennsylvania home since 
November 1972. Nurock allegedly had said that MBM was behind in its payments to 



him 



34 



In a letter dated October 9, 1973, McKee acknowledged to Nurock that MBM owed 
Nurock $40,000 for "past services." McKee proposed a payment schedule to 
cover those old amounts. In addition, McKee proposed that Nurock continue to 
work as an MBM "consultant" at a fee of $1,500 per month plus expenses (which 

would be pegged at $500 per month). It appears that Nurock accepted this 

38 
offer by signing a copy of the letter. Some payments were made pursuant to 

39 
this agreement. 

Nurock apparently offered to be of help outside Philadelphia, as well as 

within Philadelphia, and McKee apparently was interested. For example, the 

Commission found a memorandum dated December 10, 1973 and apparently sent by 

AH 

McKee to MEM Vice President salesman James A. Haney, Jr. According to the 
memorandum, "Nurock mentioned that he might be able to arrange a meeting with 
[Eoston Mayor] Kevin White." On December 28, 1973, McKee wrote to Nurock that 
McKee and Haney were enthusiastic about meeting White and that Haney would be in 
touch with Nurock about arranging the meeting. In 1979, in an interview with 
Commission staff, Haney not only denied meeting White but denied ever having seen 
the above-described documents or discussinc their substance with McKee. 



34 Id. at 1. 

35 Letter dated October 9, 1973 from Gerald McKee, Jr. to Dr. Leon Nurock, 
concerning Nurock's consulting services for MBM. 

36 Id. 

37 Id. 
3£ Id. 

35 Commission staff analysis of MPM/MCM payments to Leon C. Nurock. 

40 Memorandum dated December 10, 1973 from "G." [Gerald McKee, Jr.] to Jim 
[James A.] Haney, Jr., concerning a possible meeting with Kevin White. 

41 Letter dated December 26, 1573 from Gerald McKee, Jr. to Dr. Leon Nurock. 

42 Notes of 6/19/79 interview of James A. Haney, Jr. by Special Commission 
staff, at 1. 



- 22 - 
Nurock, however, told Commission staff that he did remember a reouest by McKee to 
meet White, and Nurock said that he asked an intermediary to arrange the 

meeting. Nurock said he did not know whether the meeting ever took 

i 44 
place, and the intermediary denied having set up such a meeting or being 

4 5 
asked to set up such a meeting. 

The Commission does not know whether such a meeting took place or whether 

White was ever contacted on behalf of MBM. It is documented, however, that MBM 

won two no-bid CPM contracts (worth a total of $43,175) from the City of 

Boston. 6 MBM's proposals for those contracts were apparently accepted by 

Boston Public Facilities Director Robert J. Vey on December 23, 1974, as 

ratified by White's signature on July 23, 1975 approving a letter-reouest from 

Vey that the contracts be awarded to MBM without public advertising, "[i]n view 

48 
of the professional and technical nature of the services to be performed." 

Mayor White was not asked to testify before the Commission because there was 

some ooubt whether the Commission had jurisdiction to take testimony concerning 

49 
these contracts. The information is presented here to illustrate the kinds 

of services that McKee souoht from Nurock. The information is also of interest 



43 Nurock 7/26/79 interview, at 2-3. 

44 Id. at 3. 

45 Notes of 8/1/79 telephone interview. 

46 MBM Job No 2-5002-502, CPM services in connection with the construction of 
the athletic wing of Mettapan Elementary School and the physical education 
building at Charlestown High School. 

47 See letter dated January 7, 1975 from MBM Vice President Kris R. Neilson to 
Robert J. Vey. 

4E Letter dated June 19, 1975 from Robert J. Vey to Kevin H. White, re: 
"Critical Path Method (CPM) Services at Charlestown High School and Mattapan 
Elementary School," with approval signed by Kevin H. White, dated July 23, 1975 

45 Mayor White testified in 1978 that he did not know whether the City of 
Boston hao done business with MBM. Testimony of Kevin H. White, P. A. 4/3/78 at 
19. 



- 23 - 

in light of McKee's testimony that he was so shocked by the way business was done 
in Massachusetts with regard to public contracts that he directed in 1973 that 
MBM stop seeking additional public work in Massachusetts. 

Illinois . MBM started obtaining public work in Illinois as early as 1962. 
According to James E. Elias, MBM's Chicago manager at the time, firms with public 
contracts in Chicago were expected to buy tickets to political fundraising 

5 ] 

events, and MBM did so. The Commission did not have access to many checks 
from MBM's Chicago bank accounts, but it did come upon one MBM corporate check 
for $1,000 dated April 23, 1970 and payable to the Democratic Party of Cook 
County. z According to James Elias, that check represented payment for ten 
$100 seats to a fundraiser for Chicago Mayor Richard J. Daley, and MBM made other 



similar contributions during the 1960's and 1970's. Elias said that on the 
first occasion when he was approached for such a contribution, he discussed it 
with McKee, who approved the payment. 

In 1972, MBM actively pursued a contract tc provide project management for s 
five-year Chicago Board of Education program to rehabilitate 250 public school 



buildinas 



55 



The project management contract, which MBM won in 1973, was worth 



$8 million and was the largest contract that MBM ever received anywhere 



56 



50 Mckee testimony, Sp. Comm. 6/26/80 at 11. 

51 Notes of 8/2/79 interview of James E. Elias by Special Commission staff, at 

7. 

52 MBM-Chicago check #8029 dated April 23, 1970 for $1,000 payable to the 
Democratic Party of Cook County. 

53 James Elias 8/2/75 interview at 7. 

54 Id . See also notes of 3/25/80 interview of James Elias's brother, Frank C. 
Elias, by Special Commission staff, at 5-6. Frank Elias was an MBM salesman who 
worked in MBM's Chicago office and other MEM offices. 

55 McKee testimony, Sp. Comm. 6/26/80 at 105-106; RonalO Koziol, "Claim Bribe 
Made for School Contract," Chicago Tribune, June 28, 1980, at 3. 

56 McKee testimony, Sp. Comm. 6/26/80 at 105. 



- 24 - 

Leaving no stone unturned in their attempt to win the contract, MBM officials 

Mansueto and Shields met on November 20, 1972 with Chicago Mayor Richard 

Daley. 57 They were allegedly accompanied and introduced to Daley by John 

O'Shea, the Treasurer of the Philadelphia Democratic City Committee. 58 

Although Mansueto and Shields told Commission staff that the introduction to 

Daley was very brief and not even a formal meeting, ° MEM apparently felt 

otherwise in 1972. According to a 1973 memorandum by McKee, Leon Nurock pointed 

out to McKee in 1973 that MBM had previously agreed "to pay O'Shea $2,000 per 

month for as long as the Chicago contract continued." That arrangement may 

be corroborated by a letter dated October 2, 1972 from McKee to O'Shea, 

confirming that MBM was engaging O'Shea's public relations firm to do advertising 

and public relations work for MBM at a fee of $2,000 per month. MBM 

62 

subsequently made payments to O'Shea and to his firm. 

The foregoing evidence should be considered in conjunction with Maurice 
Khoury's sworn statement that McKee told Khoury that MBM had to pay $100,000 or 
$150,000 to public officials for MBM to obtain or retain the Chicago school 



57 Mansueto pocket calendar, 11/20/72, contains the notation "300 p. Mtc w/ 
Mayor Daley re Chic E of E Rehab Prog." 

56 Id. 

5 ^ Notes of 7/24/79 interview of Anthony E. Mansueto by Special Commission 
staff, at 6; Shields interview. 

60 McKee 10/4/73 memorandum to files, at 2. 

61 Letter dated October 2, 1972 from Gerald McKee, Jr. tc John J. O'Shea, 
concerning public relations services from MBM. 

62 MEM checks #5807 dated 5/16/73 for $2,119.15; #6698 dated 10/4/73 for 
$4,000; #7092 dated 11/13/73 for $1,00C; #7399 dated 12/17/73 for $500; #7742 
dated 1/30/74 for $500; #8453 datec 3/26/74 for $500; for s total of $8,615.15 
all payable to Thomas J. LaErum Associates, Inc., C'Shea's public relations 
firm. In aocition, MEM checks #6851 dated 10/31/73, #7221 dated 11/21/73, #7741 
dated 1/30/74, and #8454 dated 3/26/74 each for $2,000 payable tc John O'Shea. 



- 25 - 

contract. 3 It should also be noted that Chicago newspapers have reported that 
MBM won the $8 million contract despite the fact that other firms had submitted 
proposals with lower budgets -- in one case $2.4 million less than MBM*s. 6Z| 
The contract was terminated early by the Chicago School Eoard, costing MEM $3 
million in fees and constituting the first step towards MBM's eventual 
demise, according to McKee. 66 

Louisiana . MBM sought and obtained some significant contracts in Louisiana 
in the 1970s. 67 A "consultant" who allegedly was helpful to MBM in Louisiana 
was J. Marshall Brown, a Louisiana businessman who allegedly was a fundraiser for 



Louisiana Governor John McKeithen 



68 



Brown was a "consultant" to MCM before it merged with MBM. 6 " According to 
MCM/MBM salesman William Harding, Brown was introduced to McKee, 



63 Khoury 6/24/80 affidavit, at 1. 

64 See Larry Weintraub, "Bribe Charoed in School Pact," Chicaoo Sun-Times, 
June 2S, 1980, at 56. 

65 McKee testimony, Sp. Comm. 6/26/80 at 105; Koziol, "Claim Eribe Made." 

66 McKee testimony, Sp. Comm. 6/26/80 at 105. 



67 
MBM 
expe 
1974 

See 

MBM 

park 

The 

in o 

Hosp 

Cant 



See , 

76T 

cted 

; se 

also 

for 

ing 

cont 

btai 

ital 

rell 



e.g. , agreement dated February 1, 1973 between Tulane University and 
construction management services on the Tulane University Medical Center, 

tc be worth about $770,000. The contract was canceled as of May 31, 
e letter dated May 23, 1974 from Tulane Chancellor John J. Walsh to MEM. 

agreement dated December 20, 1973 between Southern Baptist Hospital and 
construction management services on a hospital, medical office building, 
facility, and apartment building, at an expected fee of about $340,000. 
ract was canceled in October 1974 because of the Hospital's difficulties 
ning financing; see letter dated October 25, 1974 from Southern Eaptist 

Executive Director Raymond C. Wilson to MBM Regional Manager Robert J. 



68 Hardinc testimony, Sp. Comm. 6/4/8C at 14. See United Stat es v. Prown, 587 
F.2d 187 (1979). 

69 Brown's firm, Gulf State Public Relations Co., was doing consulting work 
for Mauchly in 1970, at a time when Mauchly was actively seeking the project 
management contract for the proposed Louisiana Expressway. See MCM Monthly 
Prospect Report, Outstandino Proposals, June and July 1971, at 8. See also MCM 
check dated 11/10/70 for $1,000 payable to Gulf State Public Relations Co., 
bearino the notation "October services." 



70 



Althouoh 



- 26 - 
and McKee approved the continuation of the arrangement with Brown 
the Commission did not have access to New Orleans bank records of MBM, ^ it did 
find checks totalling $6,750 to Brown from MBM in 1972-73, and checks totalling 



$4,700 to Brown's public relations firm from MBM/MCM in 1970-73 



72 



An expense account receipt of Daniel Shields's indicates that Shields, McKee, 
and Brown had dinner together in New Orleans on October 31, 1972. 5 Shields 
received a $2,500 advance from MOM by check dated October 30, 1972. Shields 
made out a personal check dated November 1, 1972 to "The McKeithen 
Campaign." 7 ^ The check was for $2,000. In 1972 McKeithen ran an independent 
campaign for the United States Senate. 

Maryland . In 1970, MBM was seeking public contracts in Prince George's 
County, Maryland. They apparently were subcontracts on jobs for which the 
Masiello firm was architect. The sales effort for MBM was apparently 
performed by Anthony Mansueto. 



70 



Harding testimony, Sp. Comm. 6/4/80 at 16 



' 7 1 The Commission does not know for a fact that MEM's New Orleans office had a 
New Orleans bank account. It probably did, since Harding had a personal bank 
account in New Orleans. See Harding personal check #194 dated 7/6/73 for 
$35,000, discussed in Chapter II. 

72 MCM checks dated 10/27/72, 11/6/72, and 1/17/73, and MBM checks dated 
8/12/72, 9/28/72 and 2/16/73 each for $500; MBM checks dated 7/19/72 for $1,500, 
and 9/14/73 for $900; MBM checks dated 10/24/73, 11/13/73, and 12/14/73 for $45C 
each; for a total of $6,750, all payable to J. Marshall Brown. The last four 
checks were jointly payable to Gulf State Public Relations Co. The checks 
payable to Gulf State Public Relations Co. were the followino: MCM check dated 
11/10/70 for $1,000, MBM checks dated 1/19/72 for $500, 2/23/72 for $500, 4/5/72 
for $500, 7/19/72 for $500, and 7/26/73 for $1,700, for a total of $4,700. 

7 ^ Shields expense account record for period October 16 - November 3, 1572. 

7Zi MCM check #345 dated 10/3C/72 for $2500 payable tc D.J. Shields, endorsed 
for deposit by Daniel J. Shielos. 

75 Daniel J. Shields personal check dated November 1, 1972 for $2,0C0 payable 
to the McKeithen campaign. 

76 See MBM Job No. 270-117, Final Estimate for the proposed detention center, 
Prince George's County, Maryland, awaroed December 29, 1970. MEM Job Card. 

77 See , e.g. , letter dated November 5, 1970 from Anthony E. Mansueto to Frank 
Masiellc, re: "Proposed Detention Center, Prince Georges County-Maryland." 



- 27 - 



78 



Mansueto received a $2,000 MBM check dated October 15, 1970. /ij Mansueto's 
pocket diary for October 16, 1970 contained the entry: "2000 in AEM [Anthony E 
Mansueto] acct for PGC [Prince George's County]." 79 Mansueto made out a 



personal check dated October 28, 1970 for $2,000 payable to cash 



60 



It appears 



from a later memorandum by Mansueto that the cash went to Frank Aluisi, a Prince 
George's County Commissioner. ^ Mansueto received another $2,000 MEM check 
dated October 29, 1970. 82 The check requisition form bore the notation: "Arvid 
Eddy (Frank Francois) Prince George['s] County." 83 Mansueto made out another 
$2,000 personal check dated October 28, 1970 payable to "Arvid Eddy - 
Treasurer." Based upon the MBM check requisition form, it would appear that 
Eddy was the campaign treasurer for Frank Francois, a Prince George's County 
Commissioner. ^ 

The MBM checks to Mansueto were treated on MBM's books as advances to 
Mansueto. When Mansueto thereafter was sent an audit confirmation reauest 
about his advance account, he responded with a memorandum labelled " PERSONAL AND 
CONFIDENTIAL " in which he objected tc the balance shown in his "advance" 



78 MBM check #7735 dated 10/15/70 for $2,000 payable to Anthony Mansueto, 
recorded as an advance. 

75 Mansueto pocket calendar, 10/16/70. 

80 Anthony E. Mansueto personal check #191 dated October 28, 1970 for $2,000 
payable to cash. 

e l Memorandum (" PERSONAL AND CONFIDENTIAL ") dated January 16, 1973 from 
Anthony E. Mansueto to Andy ["Andrew] Serell, concerning Mansueto's advance 
account . 

62 MEM check #7808 dated 10/29/70 for $2,000 payable to Anthony E. Mansueto; 
recorded as an advance. 

£3 Requisition from for MBM check #7808 dated 10/29/70 for $2,000 payable to 
Anthony E. Mansueto. 



64 



Arvid Eody - Treasurer 



Mansueto personal check #190 dated October 28, 1970 for $2,000 payable to 



65 Repuisition form for MBM check #7806 dated 10/29/70 for $2,000 payable to 
Anthony E. Mansueto. 

S6 ^bm Cash Disbursements Book shows the checks charoed to advances to 
officers. 



28 - 



87 



account. c/ Mansueto said that the balance in the account included 

"disbursements for political and other contributions which 
were paid by me personally in the interest of the company and 
for which I received no credit ... .Obviously , I do not believe 
I should be charged for something I did in behalf of the 
company. " 

As exhibits to the memorandum, Mansueto attached several of his personal checks 

p p 
to politicians, including the ones for Francois and Aluisi. 

On the same date as the Mansueto checks for Francois and Aluisi, Mansueto 

apparently invited Francois and Aluisi to attend a dinner in Washington, 

eg 

D.C. The table arranged by Mansueto also included, according to Mansueto's 
pocket calendar, Frank Masiello, Barry Locke, and John A. Volpe, along with two 
people connected with the United States Postal Service and one person employed by 



the DMJM architectural firm 



90 



£7 Mansueto 1/16/73 PERSONAL AND CONFIDENTIAL memorandum to Serell. 

ee id. 

£° Mansueto pocket calendar, 10/28/70. The event was the annual dinner of the 

Eig Erothers of the National Capital Area. 

90 Mansueto pocket calendar, page opposite 12/10/70. 



- 29 - 

APPENDIX C 

MEM'S ATTEMPT TO WIN A 

PROJECT MANAGEMENT CONTRACT 

FOR THE UMASS/WORCESTER MEDICAL SCHOOL 

In considering why the UMass/Bcston project management contract was awarded 
to MBM in December 1969, it may be useful to consider steps that WEV took a few 
months later in an attempt to win a similar contract for the UMass/Worcester 
Medical School. Although the Commonwealth ultimately decided not to use an 
outside project manager for UMass/Worcester, an analysis of MEM's sales approach 
may sheo further light on MBM's actions in obtaining the UMass/Boston contract. 

MBM began its efforts to obtain the project management contract for the 
UMass/Worcester Medical School project in June of 1970, barely two months after 
MBM's UMass/Boston contract had been signed. MBM Vice President Jack Thomas 
wrote letters to BBC Director Walter Poitrast and A&F Commissioner Donald Dwight 
requesting that MBM be considered for appointment as project manager for 
UMass/Worcester. Thomas sent copies of these letters to Anthony Mansueto, and 
Mansueto in turn forwarded copies to Endicctt Peabody. 

Peabody's partner Jeremiah Lambert sent a letter to Mansueto dated June 26, 

1970 which saio, in part: 

"We are fully prepared to assist MEM in connection with the 
Worcester Medical project and are not presently burdened by 
any conflict of interest. Chub [Peabody] will go forward 
at the appropriate time just as he did on the University of 
Massachusetts project. 

When Lambert appeared before the Commission in 1980 and was asked what "the 

appropriate time" had been in regard to the UMass/Boston project, he said the 

phrase was just a figure of speech.^ 

Deputy A&F Commissioner Albert Zabriskie had certain responsibilities with 

regard to UMass/Worcester, and Peabody apparently talked with Zabriskie several 



1 Letter dated June 19, 1970 from Jack S. Thomas to Walter J. Poitrast; letter 
dated June 23, 1970 from Jack S. Thomas to Donald R. Dwight. 

2 Letter dated June 26, 1970 from Jeremiah D. Lambert to Anthony E. Mansueto. 

3 Lambert testimony, Sp. Comm. 6/18/80 at 125-126. 



- 30 - 
times in July 1970. Peabody apparently met with Zabriskie in Boston on 
September 21, 1970 and again on October 7, 1970 with regard to UMass/Worcester . 

In preparation for the October 7, 1970 trip to Eoston, Peabody jotted the 
following entry in his spiral notebook: "MBM a) Interest in Worcester (call 
Gordon)." "Gordon" presumably was UMass Trustee Robert D. Gordon, whom 

Peabody had contacted when MEN* was seeking the UMass/Eoston contract. Peabody 

p 
also wrote the name "Toot Mazzani" on the same page of the spiral notebook. 

The Commission does not know who "Toot Mazzani" may have been, but it perhaps 

should be noted that Anthony Mansueto had apparently been in contact with 

Republican fundraiser Albert ("Toots") Manzi in reference to UMass/Worcester 

and that MBM officials have testified that MEM made a voluntary $10,000 cash 

payment to Manzi on October 16, 1970, c ' about which Peabody was consulted in 

advance . 

On October 9, 1970 Peadody wrote a memo to his partner Jeremiah Lambert about 



D eabooy's October 7 meeting with Zabriskie concerning UMass/Worcester 



12 



According to the memo, Zabriskie was going to recommend use of an outside project 
manager to the new A&F Commissioner, Charles E. Shepard, even though "Shepard 



4 Peabody law firm MEM tub card VII, entries for 7/20-21/7C, 7/23/70. 

5 Id. , MEN tub cards IX and X, entries for 9/21/70, 10/7/7C. 

6 Memorandum headed "Boston Oct. 6 & 7th [1970]," Peabody spiral notebook. 

7 See discussion in Chapter IV supra . 

£ Peabody spiral notebook, "Boston Oct. 6 & 7th." 

5 See, e.o. , Mansueto pocket calendar, 7/6/70, 8/10/70, 10/13/70. 

10 McKee testimony, Sp. Comm. 6/26/6C at 53.. Mansueto testimony, P. A. 5/23/76 
at 116-115. 

11 Mansueto testimony, P. A. 5/23/78 at 44. Peabody testimony, P. A. 3/29/78 at 
22-23, 89, 92-93; Sp. Comm. 6/19/80 at 156, 164, 167, 206. 

i2 Memorandum datec October 9, 197C from Gov. [Endicott] Peabody to Mr. 
[Jeremiah D.] Lambert, concerning MEM. 

Shepard became Acting A&F Commissioner on August 12, 1970 when Donald 
Dwight resigned to run for Lieutenant Governor. Shepard was named Commissioner 
when Acting Governor Francis Sargent took office as Governor in January 1971. 



- 31 - 

is opposed to this form of operation." Peabody continued, "It is very 
possible [that] the matter will be decided by former Commissioner Dwight, now a 
candidate for Lieutenant Governor, and he is very partial to MBM." 

As previously discussed, MBM officals have testified that on October 16, 1970 
MBM delivered $10,000 in cash in a brown paper bag to Manzi for the 
Sargent-Dwight campaign. * On October 13, 1970, when Mansueto discussed the 
payment with Endicott Peabody, Mansueto's pocket calendar made reference not only 
to that discussion about the payment but also to UMass/Worcester. 

On October 22, 1970 Mansueto wrote the following memorandum: "Re: Worcester 
Medical Center. Received call from Bill Masiello. Project ours after election 
per Zabriskie." Mansueto apparently relayed this intelligence to Jack 
Thomas, because on October 27, 1970 Thomas sent a memc to other MBM 
executives reporting that — 



"Tony [Mansueto]'s latest information indicates that funds 
($700,000) are available for management services [on the 
UMass/Worcester project], and that MBM is 'in' once the decision 
is made to hire a consultant. No activity expected until after 
election day." 

Despite these optimistic reports, there apparently was some ouestion about 

whether a project management firm could be hired for the UMass/Worcester project 

under then-existing law. It will be recalled that, for UMass/ Boston , a special 

provision was incorporated into the UMass/Boston appropriation authorization to 

permit outside project management. e To accomplish the same purpose for 

UMass/Worcester, MBM apparently prevailed upon State Senator James A. 

Kelly, Jr. to file a bill authorizing the BEC "to appoint temporary 

consultants to expedite projects." 1 The Kelly bill, S. 75, was filed on 



I* See discussion in Chapter V, supra . 

i5 Mansueto pocket calendar, 10/13/70. 

16 Memorandum [to files?] dated October 22, 1970 from Anthony E. Mansueto, 
"Re: Worcester Medical Center." 

I" 7 ConfiOential memorandum dated October 27, 1970 from Jack S. Thomas to 
Gerald McKee, Jr. concerning three projects "pending." 

16 See Acts of 1969, c. 896, and discussion in Chapter IV supra . 

On March 15, 1971 Jack Thomas wrote a memorandum to McKee, Mansueto, and 
Peabody attaching a copy of the bill (S.75) and remarking that Thomas thought 
that the bill had been "aimed at getting us onto the UMass/Worcester project." 



- 32 - 

October 28, 1970. 20 Two weeks earlier, MEM had given to KelJy a $2,000 check 
for the Kevin H. White gubernatorial campaign*- 1 (for which Kelly had been 
raising funds) 22 ana MEM had made out a $2,000 check for State Senate Majority 
Leaoer Kevin E. Harrington"^ (whom Kelly was actively supporting for Senate 
President 24 ) . 

On October 29, 1970 Mansueto spoke with Peabody, J and on November 2, 1970 
Peabody spoke with Zabriskie. On November 3, 1970 Peabody wrote tc Mansueto 
about his conversation with Zabriskie on November 2. According to Peabody's 
summary, Zabriskie said nothing would happen on the UMass/Worcester project until 
after election day but that "the blue-print which [Zabriskie] earlier tcld me 



about and which we discussed, is going forward 



„27 



Shortly after election day, Peabody again spoke with Zabriskie 



28 



In a 



memorandum summarizing a November 9, 1970 conversation with Zabriskie, 



2 Journal of the Senate. 

21 MBM-Eoston check #1822 dated October 19, 197C for $2,000 payable tc William 
Masiello, endorsed to Kelly, who endorsed it to the Kevin White for Governor 
Committee . 

22 Kelly testimony, P. A. 5/12/78 at 55. 

22 MEM-Boston check y/1812 dated October 19, 1970 for $2,000, payable tc Kevin 
Harrington . 

24 Kelly testimony, P. A. 5/12/78 at 54. When Harrington won the contested 
Senate President race, he named Kelly chairman of the Ways & Means Committee. 
See discussion of these checks in Appendix F i nf ra and in P. A. Report at 60-79. 

25 Peabody telephone records, 10/29/70. 

26 id. H/2/70. 

27 Letter datec November 3, 1970 from Endicott Peabody to Anthony E. Mansueto. 

26 Peabody telephone records, 11/9/70. 

29 Memorandum dated November 9, 1970 from EF [Encicctt Peabody] to JDL 
[Jeremiah D. Lambert], "Re: MEM - UMass/Medical School," introduced as Peabody 
Exhibit 15, Sp. Comm. 6/19/80 at 202. 



33 



Feabody reported that 



"there is a 'highly' placed Massachusetts official who has 
some firm ideas as to what should be done about this matter 
and who is bound to be influential in the decision. I 
[Peabody] think we are well thought of by that official, and I 
am going to call again just before Thanksgiving to see what 
action is being contemplated. I will stay on top of this." 

When Peabody testified in 1980 before the Commission, he was asked about this 



30 



memorandum. He said he could not recall who the "highly placed official" was. 
On November 19, 1970 UMass/Worcester Associate Dean John Stockwell wrote a 
letter expressing pleasure that a full-time construction managememt team was 
going to be established for the UMass/Worcester project. On December 8 and 9, 
1970 Peabody was in Boston. On December 11, 1970 he sent a letter to 
Mansueto reporting that in several conversations with A&F [presumably with 
Zabriskie] Peabody had ascertained that MEM was still "being highly considered" 
for the medical school, although, Peabody added, "There is still a Question as to 

whether a Project Manager has been authorized, but I believe this can be resolved 

* u.1 33 
favorably . 

Feabody recommended that Mansueto attend a cocktail party on December 22, 

1970 in Boston at which Zabriskie would be present. Peabody went on in the 

letter to say: 

"I trust you will keep me informed of all that goes on in 
Massachusetts. Having experienced the jungle cf politics in 
that state, I think I can tell you where all the pitfalls are. 
There is a great deal of work in that state outside cf the 
University of Massachusetts, and if you call us in advance, we 
can help you." 

As an example, Peabody said: 



30 Peabody testimony, Sp. Comm. 6/19/80 at 203-204. 

31 Letter dated November 19, 1970 from John F. Stockwell to Walter J. 
Poitrast. Presumably, Stockwell was referring tc an outside construction 
management team; the EEC was still understaffed and thus incapable of fielding a 
full-time construction management team consisting solely of EEC employees. 

32 Peabody law firm MEM tub card XII. 

23 Letter dated December 11, 1970 from Endicott Peabody to Anthony E. 
Mansueto, at 1. 



- 34 - 

"I air sorry you missed out on a Logan Airport matter. I 
still have two appointees of mine on the Port Authority and they 
might have been of some help had they known of my interest." 

Peabody and Mansueto continued to pursue the UMass/Worcester contract. On 
December 15, 1970 -- a day on which Mansueto was in Palm Eeach, Florida -- 
Mansueto's pocket calendar contained the entry: "Worcester Med. Ctr. - Kelly 
back."- 5 And on January 6, 1971, Peabody again spoke with Zabriskie about 
UM ass/Worcester. 35 

Unfortunately for MBM, a series of newspaper articles appeared early in 
February of 1971 severely criticizing MBM's existing project management contract 
at UMass/Boston. The articles led to the creation of the legislative 
committee, chaireo by Senator DiCarlo and Representative Sirianni, to look into 
the contract." These events apparently made it politically impossible for MEM 
to receive any more Massachusetts state contracts for a while. Eut in late 
August 1971, when MEM began to have reason to believe that it might emerge from 
the DiCarlo-Sirianni Committee unscathed, MEM again displayed interest in getting 
work at UMass/Worcester . MBM President McKee wrote a letter to Peabody on August 
30, 1971 stating that MBM was about to acauire an old rival, Mauchly Construction 
Management ("MCM" -- formerly part of Mauchly Associates) and expressing hope 

that the combined MEM-MCM forces could win a project management contract at 

36 
UMass/Worcester. Although no project management contract as such ever was 

awarded for UMass/Worcester, MCM had already performed some CPM work at 



UMass/Worcester, and MCM received additional work there after being acouired by 
MBM."" 



34 Mansuetc pocket calendar, 12/15/7C. 

See memorandum dated January 6, 1971 from E.P. [Endicott Peabody] to J.D.L. 
[Jeremiah D. Lambert], re: "MEM/University of Massachusetts at Worcester." 

36 See discussion in Chapter VII infra . 

37 See discussion in Chapter VII infra . 

38 Letter dated August 30, 1971 from Gerald McKee, Jr. tc Endicott Peabody. 

39 Commission staff analysis of MBM and MCM contracts in Massachusetts. 



- 35 - 

APPENDIX D 

MBM'S ATTEMPTS TO WIN 

CONTRACTS REGARDING THE 

MIDDLESEX COUNTY COURTHOUSE 

Another demonstration of methods that MEM used in seeking contracts is 

provided by the Middlesex County Courthouse. MBM ' s attempts to obtain work 

there began in January 1970, less than one month after MEM won the UMass/Boston 

contract. The courthouse project had started years earlier and was experiencing 

severe difficulties. The county commissioners decided to look for a 

construction consultant, and MEM was interested. MBM conveyed its interest to 

Endicott Peabody, and Peabody promptly contacted all three county 

commissioners and their counsel. Peabody soon reported that he had 

"commitments from all three commissioners" to accept MBM's proposal to provide 

initial consulting services for a fee of approximately $30,000. MBM was in 

fact awarded that initial contract on February 24, 1970, resulting in a fee to 

MBM of $33,960 for less than two months' work which apparently was done in large 

part by Jack S. Thomas. The major services that MBM provided for the $33,960 fee 

seem to have been a simple CPM schedule and an 11-page letter whose primary 

recommendation was that the commissioners enaaae e construction 



1 See , e.g. , Sareen P. Gerson, "County Courthouse--f rom Beginning tc Today," 
Lexington Minuteman, March 18, 1971, supplement. 

2 a copy of the commissioners' resolve was found in MBM's Middlesex County 
Courthouse file, but there appears to be no record of it in the commissioner's 
minutes . 

2 Memorandum headed "County Court House and Jail," undated but probably 
January 26, 1970; Peabocy spiral notebook. 

4 Peabody law firm MBM tub card III, entries for #1/29/70, 2/2/70, 2/9/7C, 
2/10/70. Letter cated January 30, 1970 from Endicott Peabooy to Gerald J. [ sic ] 
McKee, Jr., re: Middlesex County Courthouse. 

5 Draft memorandum dated February 11, 1970 from Governor [Endicott] Peabody to 
J[eremiah] D. Lambert, concerning the Middlesex County Courthouse, at 1. 

£ See letter dated April 21, 1970 from Jack S. Thomas for MBM to Middlesex 
County Commissioners, concerning Middlesex County Superior Courthouse, 
Conclusions and Recommendations, at 1. 



- 36 - 

manager for the project. Apparently seeing no conflict of 

interest, MEM began a two-year campaign to win such a construction management 
contract, which MBM expected to be far more lucrative than its initial consulting 
contract . ^ 

Feabody was eager to assist MBM in its attempt to win the Middlesex County 
Courthouse construction management contract, believing that his efforts had been 

c 

instrumental in producing the initial contract and that successful efforts of 
this nature should be rewarded above and beyond the normal retainer (as with the 



UMass/Boston contract) 



10 



As it happened, however, the project came under 



criticism, and the Massachusetts Legislature in August 197C refused to provide 
any additional funds for the courthouse project. 

The State Senate's Committee on Counties came under the chairmanship, in 
January 1971, of Joseph J.C. DiCarlo. Less than a month later, DiCarlo 
co-sponsored an order calling for a legislative investigation of MBM's 
UMass/Eoston project management contract, and DiCarlo soon thereafter was 
appointed Senate Chairman of the resulting special investigative committee. 
As discussed mere fully in Chapter VII, DiCarlo was eventually paid mere than ten 
thousanc collars in cash by MEM. In return, DiCarlo produced a favorable 
committee report for MBM, enabling MBM to win over $1 million worth cf extension 
contracts of the UMass/Boston project. In addition, DiCarlo allegedly agreed to 
help MBM win the Middlesex County Courthouse construction management contract 
that MBM had lone been seekina. 



~ Thoires 4/21/70 letter to Middlesex County Commissioners , at 7-10. 

6 Peabocy 2/11/70 craft memorandum to Lambert indicates that the management 
contract fee was anticipated to be $100,000 or more. 

5 See memorandum dated May 7, 1970 from Gov. [Endicott] Peabody to Mr. 
[Jeremiah D.] Lambert, concerning MBM-Middlesex County contract. 

l u See Peabooy 2/11/70 draft memorandum to Lambert, and memorandum dated May 6 
[197uT - from "Chub" [Endicott Peabody] to "Jerry" [Jeremiah D. Lambert], 
concerning the fee arrangement for the Middlesex County contract. 

11 Se_e "House Kills $8. 5m for Courthouse," Boston Globe, August 22, 1970. 

12 See discussion in Chapter VII infra . 
1 ' See discussion in Chapter VII ir f re . 



- 37 - 

Since DiCarlo swore under oath that he did not take any steps to help MBM win 
the Middlesex County contract, it is appropriate to summarize some of the 
evidence on the matter. In late August of 1971, DiCarlo apparently was 
introduceo by his colleague, Senator Ronald C. MacKenzie, to Daniel J. Shields 
and William F. Harding of MBM. i5 Not long after this meeting, the first 
concrete arrangements were made which led to DiCarlo's alteration of the 
legislative report about MBM's UMass/Boston contract in return for money from 
MBM. i6 Within a week of this August 1571 meeting, DiCarlo was quoted in the 
press as favoring an independent consultant for the Middlesex County Courthouse 

project. *■' By October 1971, DiCarlo -- who had ascended to the Senate 

1 £ 
chairmanship of the Joint Rules Committee -- was quoted in several press 

reports as saying that he would not permit consideration by the Legislature of 

any bill to fund the completion of the courthouse unless the bill reouired the 

retention of an outside consultant to oversee the work. Moreover, DiCarlo 

was reported in the press to have a specific firm in mind: MBM. 20 In 

testimony before the Commission in 1980, DiCarlo flatly denied these press 

accounts from 1571, adding the observation that sometimes the press makes 

mistakes. While that observation is undoubtedly true, it is also true that 



iA DiCarlo testimony, Sp. Comm. 6/3/80 at 98-102. 

15 See letter dated August 30, 1971 from Gerald McKee, Jr. to Endicott 
Peabody, concerning meetings with Massachusetts officials. Shields and Harding 
had been President and Vice President of Mauchly Construction Management, Inc., 
which was then in the process of being acquired by MBM. Shields and Harding saw 
DiCarlo on behalf of the MBM/MCM combined firm. 

16 See discussion in Chapter VII infra . 

1 7 Shelly Cohen, "Bail-out for Courthouse," Medford Mercury and ether papers, 
September 1, 1971. 

1£ Kenneth Sweeney, "$21 million figure on Mbsx. Courthouse bill; DiCarlc 
wants more info," Lexington Middleman and other papers, October 21, 1971. 

15 Id. ; Shelly Cohen, "DiCarlo eyes safeguards," Medford Mercury and other 
papers, October 7-12, 1971. 

20 Shelly Cohen, "County Courthouse gains signatures," South Middlesex Daily 
News ( Framingham ) , October 31, 1971. 

21 DiCarlo testimony, Sp. Comm. 6/3/80 at 101-102. 



- 38 - 

the articles were by several reporters -- at least some of whom are well 
respected -- and they appeared over several months without any challenge at the 
time from DiCarlo. 

Daniel Shields provided the Commission with an explanation of why DiCarlo was 
solicitous of MBM with regard to the Middlesex County Courthouse project. 

According to Shields's testimony, DiCarlo was to be paid in cash by MBM for 

23 

DiCarlo's assistance on the Courthouse project. DiCarlo eventually did let 

the courthouse bill through the Rules Committee without the construction 
management requirement, 2 ^ but Shields explained that DiCarlo's change of 
attitude resulted from a disagreement between DiCarlo and McKee about whether the 
cash payment to DiCarlo for the courthouse assistance was to be part of -- or was 
to be in addition to -- the amount that DiCarlo was being paid for altering the 

2 5 

legislative report on MBM's UMass/Boston contract. 

MBM President Gerald McKee, Jr. has denied that MBM ever discussed paying 
DiCarlo in return for help that DiCarlo might render in MBM's attempts to win the 
Middlesex County Courthouse contract or other contracts. However, McKee and 
others testified at the DiCarlo-MacKenzie trial that DiCarlc said, during a 
meeting in New York after DiCarlo's report on the UMass/Eoston contract had beer 

completed, that DiCarlo would not help MBM win other contracts unless MPM paid 

26 

hi it promptly. 



22 These articles were among those sent to DiCarlo's office by his clipping 
service. 

23 Shields testimony, Sp. Comm. 6/2/80 at 7E-85. 

24 The funding authorization bill for the courthouse was passed by the 
Legislature on January 31, 1972 as Acts of 1572, c.4. 

25 Shields testimony, Sp. Comm. 6/2/8C at 81-85. 

26 McKee testimony, 5 DiC 1/31/77 at 73-86; Shields testimony, 15 DiC 2/14/77 
at 89-94, 143. 



- 39 - 

Although MBM never did receive the construction management contract that it 
sought for the Middlesex County Courthouse, it did receive a contract in February 
1572 to act as expert witness for the Middlesex County Commissioners in 



litigation over problems in the courthouse construction project 



27 



That 



contract, which was apparently never noted in the minutes of the Middlesex County 



Commissioners' meetings, generated almost $100,000 in fees for MEM 



28 



27 See letter dated February 11, 1972 from Middlesex County Commissioners' 
counsel R. Robert Popec to Chairman John F. Dever, recommending the approval of 
MBM's proposed contract; Proposal dated February 3, 1572 from MEM to Middlesex 
County Commissioners, concerning construction consulting services. 

26 Special Commission staff analysis of payments to MEM for work on the 
Middlesex County Courthouse. See also Shelly Cohen, "County signs no limit 
contract with consultants," South Middlesex Daily News ( Framinoham ) , February 18, 
1572. 



- 40 - 
APPENDIX E 



MEM'S SUCCESSFUL EFFORTS 
REGARDING ITS "DELAY CLAIM" IN 1972 

The UMass/Boston project was built on a sanitary land-fill . The nature of the 
site made it less expensive for the Commonwealth to acouire than other land would 
have been, but it also increased the development costs somewhat. Moreover, one 
characteristic of sanitary land-fills is that they may have subsurface deposits 
of methane gas. This was the case at the UMass/Boston site, and it was a fact of 
which the UMass/Boston planners had been aware and which they apparently took 
into account in their planning. Nonetheless, some individuals -- including at 
least one newspaper columnist -- became convinced that "lethal methane gas" on 
the UMass/Eoston site was potentially explosive. As a result of their 
concern, they persuaded the Legislature in August 1570 to suspend certain 
construction activities on the UMass/Boston site.^ The suspension lasted for 
about five months while inaependent studies were conducted about the methane gas 
situation and what to do about it. 

Although certain construction activities were thus delayed, other design and 
review activities continued. Indeed, enough activity continued that BBC Project 
Director James Cusack later concluded that the methane studies had not 



substantially delayed completion of the project 



f 3 



1 See, e.g. , Wendell Woodman, "UMass Trustees Knew of Methane Concentrations at 
Columbia Point," New England News Service Release dated Julyl6, 1970, and 
"Columbia Point Gut as Campus Site, Watertown Land Is Bought," New England 
News Service Release dated July 17, 1970. Notes of 10/11/79 interview of 
Wendell H. Woodman by Special Commission staff, at 1. 

2 Acts of 1970, c.633, apprcved August 7, 1570. Section 2, item 6C71-66 of 
Chapter £33 suspended building construction. 



3 Memorandum dateo December 14, 1572 from EPC Project Director James J 
tc EEC Director Walter J. Poitrast, opposing MBM ' s delay claim. 



Cusack 



- 41 - 

Nonetheless, MEM decided that it was entitled to a "delay clairr" for the 
"extra expenses" it incurred as a result of the legislatively imposed delay on 
the project. Why MBM should have been entitled to any extra compensation is 
unclear. Under the fixed fee portion of MEM's contract, the salaries of 
specified MBM employees were being paid in full. Since MBM was subseouently 
granted extensions to its contract, those salaries presumably were fully covered 
for the entire period of those employees' tenure on the project. As to MEM 
employees not covered under the fixed fee portion of MBM's contract, they were 
covered under the "reimbursable" section of the contract, pursuant to which MEM 
was reimbursed in full for the salary expenses and given a 2C percent mark-up 
(presumably for profit) as well. In any event, in February 1972, MBM filed a 
"delay claim" in the amount of $95,700. This amount apparently was determined 
by doubling MBM's supposed additional salary expenses from the delay. 
Although MBM pressed for approval of the delay claim, it was still not approved 
as of November 1972. 

MEM's financial situation by November 1972 was precarious, perhaps even 



4 See Contract for Consultant Services no. 601, Massachusetts State Proiect 
no. U67-4 #2A, between the EEC and MEM, at 13. 

5 See Contract for Consultant Services no. 601, Massachusetts State Proiect 
no. U67-4 #2A, between the BBC and MEM, at 17. 

6 Letter dated February 16, 1972 from Jack S. Thomas to BBC Director, Walter 
J. Poitrast, concerning a request for additional payment due to project delay. 

7 Id. at 3. 

8 See memorandum dated November 3, 1972 from Jack S. Thomas to G[erald] 
McKee, Jr., concerning Phase I extension and the delay claim. 



- 42 - 

c 
desperate. In order to come up with funds to pay such basic expenses as 

electricity, telephone, photocopying, and security, MBM felt it imperative that 

the delay claim be approved post haste . ° MEM's Boston manager, Jack Thomas, 

urged MBM President McKee to reduce MBM's delay claim from twice direct salary 

expense ($95,700) to either direct salary expense plus 20 percent ($57,000) or 

just direct salary expense ($48,000), without a markup in order to expedite 

approval. ■*■ Furthermore, MEM considered prompt approval of the delay claim to 

be so urgent that Thomas and McKee asked former Governor Peabody to fly to Boston 

to participate in a sort of summit meeting with the responsible state 

officials. 12 

It seemed clear to MBM that the key person in the decision-making process 

would be Frederick J. Kussman, the administrative assistant to BBC Director 

Walter Poitrast. Kussman was generally responsible for fiscal matters within the 

EEC, and he had been helpful to MBM in the past. In particular, he had 

helped MEM to draft MBM's proposal to the BBC for Phase II of the UMass/Boston 

project; 1 he hao apparently chosen net to penalize MEM or declare it in breach 

of its UMass/Boston Phase I contract when MBM improperly retained for its own use 

funds that it was supposed to pass on to subcontractors; and he had prepared the 

first draft of the DiCarlo-Sirianni committee report which, even if it were not 



9 Id. at 2; see also McKee testimony, Sp. Comm. 6/26/80 at 85. 

10 Thomas 11/3/72 memorandum tn McKee, at 1-2. 

11 _I_d- !t should be noted that "direct salary expense" included not only the 
actual salary, but also applicable Social Security, state unemployment, federal 
unemployment, group insurance, vacations, paid holidays, and sick leave. 

12 See letter dated November 2, 1972 from Jack S. Thomas tc Encicett Peabody, 
concerning a meeting on November 9, 1972 about the delay claim. 

13 See notes of 12/14/79 interview of Jack S. Thomas by Special Commission 
staff, at £. 

14 Id. at 15. 



- 43 - 

as favorable as MBM wanted, at least did not conclude that MBM's UMass/Boston 
contract was illegal or excessive or was to be terminated immediately. McKee 
described Kussman as "MEM's interface with BBC for all contractual matters" and 
as a "strong advocate" of MEM's work and of construction management in 
general. In return, MEM had been good to Kussman. For example, in January 
1972, MBM gave $2,000 in cash to kussman, according to Jack Thomas. And on 

November 6, 1972, Thomas asked McKee's permission for MBM to underwrite Kussman's 

1 p 
attendance at a conference in Puerto Rico scheduled for December 1972. 

On November 9, 1972 a conference on the delay claim took place in Boston 

among Peabody, Thomas, Kussman, Poitrast, Zabriskie, Assistant Transportation 

Secretary William Najam, A&F engineer Philip Dick (who had recently left MBM ' s 

payroll) 1 and MBM project manager C. Ronald Rabin. MBM seems to have proposed 

20 
that the delay claim be settled for $57,000, but no firm agreement was 

21 
reached at the meeting. 



1^ See discussion in Chapter VII infra . 

16 Notes of 2/15/80 interview of Gerald McKee, Jr. by Special Commission 
staff, at 1. 

17 Thomas testimony, 12A DiC 2/9/77 at 27; Thomas 12/14/79 written statement 

at 2. Thomas said that he went with William Masiello to Kussman's home, that Thomas 
gave the cash to Masiello to give to Kussman, and that Thomas had no reason to 
believe that Masiello did not follow through as agreed. 

18 Memorandum dated November 6, 1S72 from Jack S. Thomas to G[erald] McKee, 

Jr. The Commission has no evidence on whether Kussman went to the conference or 
on whether MBM paid anything in that connection. 

19 Notes of 2/5/80 interview of Philip Dick by Special Commission staff, at 
1. It is not clear whether Dick was ever really an MBM employee as such, or 
whether he was put on MBM ' s payroll as an accommodation to BBC project engineer 
James J. Cusack who wanted Dick to work on the project. Dick had previously been 
employed by the state Department of Mental Health. 

/u See letter dated November 15, 1972 from Endicott Peabody to Jack S. Thomas. 
21 Id. 



- 44 - 

After the meeting, according to Thomas, there was a discussion between Thomas 
and McKee about how to get the delay claim resolved promptly in MEM's favor. 22 
According to Thomas, McKee instructed Thomas to offer money to Kussman in return 

2 "3 

for Kussman's expediting the resolution of the delay claim in MBM's favor. 

Thomas, who currently lives and works in Kuwait, did not come to the United 
States to testify before the Commission. But in the London interview in 1579 
with Commission staff at which this topic was discusseo, it was Thomas who 
volunteered the information; the Commission had not asked Thomas anything about 
the delay claim. Thomas explained that he had not previously revealed the 
information because he had not wanted to hurt Kussman, whom Thomas regarded as 
one of the few capable individuals within the BBC. Despite his feeling for 
Kussman, Thomas was willing to swear to his account, and he executed a written 
statement repeating it. 

When McKee was shown Thomas's written statement and a transcript of Thomas's 

25 

oral statement on the matter, McKee pronounced it untrue. Shortly thereafter, 

McKee met with Thomas in the Middle East and expressed his views tc Thomas on the 
subject. 2 ^ Nonetheless, Thomas stuck to his account, insisting that what he 
had told the Commission staff was what he remembered. Since Thomas had worked 
with and apparently been close to McKee for some twenty years, £ Thomas 



22 written statement dated December 14, 1575 executed by Jack S. Thomas in 
London, England, concerning the delay claim, at 1. 

23 id. 

24 Thomas 12/14/75 interview; Thomas 12/14/75 written statement. 

25 ycKee 2/15/80 interview at 2-3. 

26 See McKee testimony, Sp. Comm. 6/26/80 at 87-65. 

27 Thomas testimony, 10 M/M 2/26/75 at 42. 



- 45 - 

apparently felt very strongly that this account was true. 2 ^ 

In any event, according to Thomas, Kussman accepted MBM's offer of money in 
return for expediting the delay claim, and it was agreed that $2,000 would be the 

29 
payment to Kussman. ? The Commission wished to Question Kussman about this and 

other matters, but Kussman asserted his privilege against 
self-incrimination. 

An American Express receipt in MBM's files indicates that Thomas met with 
Kussman at the Point After lounge in Boston on November 13, 1972. As it happens, 
the BBC's approval (by what appears to be a signature stamp of Deputy Director 
George T. Rushton -- a signature stamp which Kussman presumably was authorized to 
use) of MBM's delay claim is dated November 13, 1972.' The claim ouickly was 
approved, in turn, by A&F and by the Office of Transportation 4 
Construction, l and on November 16, 1972 Kussman signed a reservation of funds 
form in regard to the delay claim. 33 The Commonwealth's check to MBM was dated 
November 30, 1972.34 



26 McKee said that perhaps Thomas had misunderstood an instruction to "let 
Freddie keep half" -- by which McKee would have meant that MBM would compromise 
its delay claim by 50 percent, benefitting the BBC. McKee 2/15/80 interview, at 
3. One may wonder how Thomas, who had worked so long for McKee, could have so 
misunderstood such an instruction. 

25 Thomas 12/14/79 written statement, at 1. 

30 Testimony of Frederick J. Kussman, Sp. Comrr. A/25/79 at 4-24. 

31 Memorandum of Approval #73-36, dated November 13, 1972 from Walter J. 
Poitrast (signed by George T. Rushton) to the Secretaries of Administration and 
of Transportation and Construction, concerning MBM's compensation claim for 
methane gas delay. 

3^ Memorandum of Approval #73-36, approved by Secretary cf Transportation and 
Construction Alan Altshuler on November 15, 1972, and by Secretary of 
Administration William I. Co*in on November 20, 1972. 

33 Commonwealth of Massachusetts, reservation of funds form dated 11/16/72, 
for claim for additional compensation ... payable to MBM. 

34 Commonwealth of Massachusetts check #316535 dated 11/30/72 payable to MBM. 
The claim was settled for $47,862.15 -- MBM's "direct salary expense." 



- 46 - 
MBM soon began its payments to Kussman. The first payment -- for $1,000 -- 
was made by a check dated December IS, 1972 on the account of Equipment 
Development, Inc. ("EDI"), a wholly-owned subsidiary of MEM." The check was 
signed by Thomas who -- in addition to being MEM's Eoston manager -- was 
President of EDI. The address of EDI shown en the check was the same as that of 
MBS" s Eoston office. The next payment to Kussman was by an EDI check dated March 
9, 1973 for $500. 36 A third payment, for $250, was apparently made in 1974 by 
means of a check on an MBM bank account in Puerto Rico; in 1974, Thomas was 
managing MEM work in Puerto Rico, and he allegedly made his third payment when 
Kussman -- accompanied by William Masiello -- visited MBM's Puerto Rico 

office. According to Thomas, these payments totalling $1,750 were made solely 

3P 
on account of Kussman's having expedited MEM's UMass/Boston delay claim. 

39 
Kussman admitted in 1977 that he had received the payments, but he gave a 

very different explanation about why he was entitled to the money. At an 

administrative hearing in 1977, Kussman testified under oath that the $1,750 was 

payment for his acting as a consultant for EDI in connection with a project in 

Chicago, Illinois. Kussman testified that he had no idea that EDI was 

related to MBM, although he knew that EDI's President, Thomas, was the MEM 



35 EDI check #195 dated December 19, 1972 for $1000 payable to Frederick J. 
Kussman. 

36 EDI check #206 dated March 9, 1973 for $500 payable to Frederick J. Kussman 

37 Thomas 12/14/79 written statement, at 2. 
3£ Id. 

39 in the matter of Frederick J. Kussman, administrative hearing before Marie 
Jackson, hearing officer. 

40 ip. at 2-23 to 2-27. 



- 47 - 

Vice President in charge of MBM's Boston office. Ai Kussman apparently tcok the 
administrative hearing seriously. At Kussman's behest, MBM President McKee wrote 
a letter supporting Kussman's position. Kussman was found by the hearing 
officer to have engaged in no wrong-doing with regard to the money from 
EDI/MBM.* 3 

Kussman's testimony and McKee's letter to the administrative hearing were 
both knowingly untrue, according to Thomas. The only work that Kussman ever 
did for MBM in Chicago, Thomas said, was to provide a helpful recommendation for 
MBM when MBM applied for the largest contract that MBM was ever to receive, the 
$8 million Chicago School Board contract. 5 EDI had absolutely nothing to do 
with that or any other Chicago job, according to Thomas, and Kussman was given 
only expenses and perhaps a per diem for his help in Chicago, Thomas said.* 6 
As for McKee's letter, Thomas said that McKee sent him a copy of it, suggesting 
that Thomas also send a letter supporting Kussman, but Thomas refused to submit 
an untrue letter ana therefore sent nothino for the administrative hearino.* 7 



41 Id. at 2-23 to 2-24, 2-27. 

42 Letter dated March 9, 1977 from Gerald McKee, Jr. to Frederick J. Kussman, 
concerning Kussman's work for EDI. 

43 Report of Hearino Officer Desicnee, Matter of Frederick J. Kussman, 9/7/77 
at 6-9. 

44 Thomas 12/14/79 interview, at 16; Thomas 12/14/79 written statement, at 2. 

45 Thomas 12/14/79 written statement, at 2. 

46 Id. ; Thomas 12/14/79 interview, at 14. 

47 Thomas 12/14/79. 



- 48 - 
APPENDIX F 

MBM'S FEE FOR WORK AT THE 
WORCESTER COUNTY JAIL 

In early 1970 the Worcester architectural firm of Masiello & Associates had a 
contract for work regarding the Worcester County Jail. Masiello, in turn, 
recommended to the Worcester County Commissioners on March 25, 1970 that MEM be 
hired to do cost control work on the jail. On March 31, 1970 the Commissioners 
authorized Masiello & Associates to hire MBM as cost control consultant for a fee 
not to exceed $20,000. 2 

In November 1971 MBM Vice President Jack Thomas sent a memorandum to MBM Vice 

President Anthony Mansueto about MBM ' s fee for work on the Worcester County 

Jail."' The memorandum says: 

"The fee for the Worcester County Jail was slightly over 
$19,000. Our costs S 2 1/2 DSE, plus out-of-pocket 
expenses amounted to $9,000. It appears that the Fee you 
established was about right -- all things considered." 

This memorandum suggests that MBM received an extremely lucrative fee on this 

public project, with a profit margin similar to what MBM expected to make on the 

UMass/Boston contract. The cryptic language in the memorandum raises 

questions about why a $10,000 profit on a $19,000 county contract should have 

been "about rioht -- all thinos considered." 



1 See proposal dated March 25, 1970 from MBM to Masiello and Associates, "Re: 
Jail Facility, Worcester County." 

2 Letter dated March 31, 1970 from Paul X. Tivnan, Chairman of the Worcester 
County Commissioners, to Masiello & Associates, authorizing the hiring of MBM. 

3 Memorandum dated November 22, 1971 from Jack S. Thomas to A[nthony] E. 
Mansueto, concerning the Worcester County Jail. 

4 See undated MBM document, "UMass Boston Campus, 459-004, Summery of Budget," 
introduced as Mck'ee Exhibit 7, Sp. Comm. 6/26/80 at 38; see also discussion in 
Chapter VI. 

Inaeec, one might conclude that MEM's normal profit was emcompassed within 
the 2 1/2 multiplier of direct salary expense, since that is the basis that MBM 
used for its total fee for other projects. See , e.g. , Thomas 11/3/72 memorandum 
to McKee concerning Phase 1 extension and the delay claim. It is unclear why 
Thomas said that the total fee was "slightly over $19,000" since other documents 
indicate that MBM was paid exactly $20,00C for work on the Worcester County jail, 
as outlined later in the text. Perhaps MBM had two contracts in relation to the 
jail. 



- 49 - 

One possible reason why a $10,000 excess fee would have been "about right" -- 
all things considered" is that between October and November of 1971, MBM had had 
to generate $10,000 in cash, apparently for political payments in 
Massachusetts. Another explanation of where the extra money may have gone was 
provided to the Commission in testimony by William Masiello. 

According to Masiello, he had a dinner meeting with Anthony Mansueto during 
the summer of 1970 at which MBM's billings on the Worcester County Jail project 
were discussed. 7 Masiello testified that at that dinner he suggested to 
Mansueto that MBM falsely inflate by $4,000 an invoice that it was about to 
submit; Masiello pledged that he would approve the invoice for payment by 
Worcester County. 

According to Masiello, he proposed that the $4,000 be given as political 
contributions to two fundraising projects that Masiello was working on for 
Senator James A. Kelly, Jr. Those projects were Boston Mayor Kevin H. White's 
gubernatorial campaign and State Senate Majority Leader Kevin E. Harrington's 

c 

attempt to become Senate President.'' Kelly was a key supporter of Harrington 
and expected to be named to the powerful post of Senate Ways & Means Chairman if 
Harrington became Senate President. Kelly was also playing an active rcle in 
White's campaign tc become Governor. 

According to Masiello, Mansueto agreed to this proposal to inflate MBM's bill 
and make the contributions, 1 ^ and on August 31, 1970, MBM submitted an invoice 
to Masiello & Associates for $11,071.85 which included, according to Masiello, 



£ See discussion in Chapter VII. 

7 William Masiello testimony, Sp. Ccmm. 6/24/80 at 15-16 

e William Masiello testimony, Sp. Comrr. 6/24/60 at 16-17, 

9 Id. at 17. 

10 Id.; Kelly testimony, P. A. 5/12/78 at 54. 

11 Kelly testimony, P. A. 5/12/78 at 55. 

12 William Masiello testimony, Sp. Comm. 6/24/8C at 18. 



- 50 - 

$4,000 for work not performed. Masiello approved the invoice end submitted it to 
the Worcester County Commissioners on September 21, 1970. 

Payment to MBM was made by a check dated October 2, 1970. Masiello testified 
that he personally delivered the check to Mansueto in Kelly's presence, on the 
evening of October 13, 1970. 1A 

On the following day (October 14, 1970) Kelly and Masiello met with Mansueto 
at MBM's Boston office. At one time or another, this meeting has been testified 
about by all of the participants. They agree that contributions to 
Harrington and to the White campaign were discussed and that, as a result of 
those conversations, MBM corporate checks were made payable to Harrington and to 
the White campaign. 6 Each of those checks was for $2,000. 

According to Masiello, the Harrington check was taken by Kelly and Masiello 
to the State House, where Kelly went into Harrington's inner office to leave off 



the check 



18 



The check was endorsed and cashed at Harrinaton's bank in 



Salem 



1' 



1977 



20 



Unfortunately for Harrington, the check came to light late in 
The check was illegal on its face, since the law prohibits 



13 id.- at 18-20; MBM invoice no. 6121 dated August 31, 1970 to Masiello & 
Associates, "Re: Schematic Estimate, Worcester County Jail Facility," in the 
amount of $11,071.85. Letter dated September 21, 1970 frorr William V. Masiello 
to Worcester County Commissioners, "Re: Worcester County Jail." 

1A William Masiello testimony, Sp. Co mm. 6/24/80 at 22-23; Check #1018 on the 
account of Worcester County Prison Colony Loan Act of 1969, dated October 2, 
1970, payable to MBM in the amount of $11,071.85. 

15 Mansueto testimony, F.A. 5/23/76 at 52-56; Kelly testimony, P. A. 5/12/78 

at 22-31, 43-51; William Masiello testimony, 24 y/^ 3/23/79 at 67-9C; Sp. Comm, 
6/24/60 at 25-32. 

1£ Mansueto testimony, P. A. 5/23/78 at 54-55; Kelly testimony, F.A. 5/12/78 
at 33, 43-45; William Masiello testimony, 24 M/M 3/23/79 at 83-86; Sp. Comrr . 
6/24/80 at 25-27. 

17 MBM-Boston check #1812 dated October 19, 1970 for $200C, payable to Kevin 
Harrington. MBM-Boston check #1813 dated October 19, 1970 for $2000 payable to 
Kevin White; check #1813 was voided -- see below. 

16 William Masiello testimony, Sp. Comm. 6/24/8C at 27. 

19 Affidavit dated May 12, 1978 executed by Salem Savings Bank Vice President 
George W. Olson, at 1-2; this affidavit was Appendix 39 to F.A. Report. 

2u Information about this check and other MBM political payments in 
Massachusetts was made public with the release (on December 29, 1977) of the 
impounded bench conference that had occurred in the DiCarlo-MacKenzie trial on 
February 1, 1977. See Chapter VIII. 



21 



- 51 - 

the giving of corporate funds to politicians and the receipt of such funds 
Harrington reportedly had been planning to run for Governor in 1978, and he 

denied at the Post Audit Subcommittee hearings in 1978 that he had received or 

22 
cashed the check. His testimony was questioned, since the endorsement 

appeared to be his signature and since it seemed unlikely that anyone else could 

have been mistaken for Harrington -- who is approximately 7 feet tall -- at 

9 3 

Harrington's bank in Salem. J A handwriting analyst engaged by the Post Audit 

Subcommittee concluded that the endorsement on the check was, in the analyst's 
expert opinion, Harrington's handwriting . 2A Harrington thereafter did not run 
for governor and did not seek re-election to the State Senate. 

The MBM corporate check to White could have been eoually embarrassing, except 
that White's fundraisers recognized the problem posed by a corporate check and 
consequently refused to accept the check, according to Masiello. 25 MBM voided 
the check and made out a new one, payable to Masiello. This substitute check 
might, on its face, have seemed a legitimate payment of a business expense, 
although it was not, according to both Masiello and MBM witnesses. "^ Masiello 
testified that, on Kelly's instructions, Masiello endorsed the check over to 



21 G.L. c.55 s.8. 

22 Testimony of Senate President Kevin B. Harrington, P. A. A/11/78 at 6, 22, 
et passim . 

23 see_ P. A. Report at 72-79. 

2Zt P. A. Report at 73-74; F.A. Report, Appendix 40, Report on the Signature of 
Kevin Harrington dated June 5, 1978 from handwriting expert Elizabeth McCarthy to 
Representative Gerald Cohen, Chairman of the Post Audit Subcommittee. 

25 William Masiello testimony, Sp. Comm. 6/2A/8C at 28-29. 

26 16. at 29; Mansuetc testimony, P. A. 5/23/78 at 53-55; McKee testimony, P. A. 
3/22/78 at 87-89, 99, 101, 103. 



- 5: 



27 



Kelly, and Kelly in turn endorsed it to the White campaign. " In theory, the 
endorsements turned it into a personal contribution by either Kelly or Masiello, 
(It was apparently reported as a contribution by Kelly.) Baseo upon the 
foregoing testimony, it was an illegal, laundered corporate contribution from 



MBM 



29 



Although MBM's contract authorized a fee of up to $20,000 MBM had only billed 
for $11,071.85. According to Masiello's testimony, the remaining $6,928.15 was 
claimed by means of a fraudulent invoice by MBM, with the proceeds to go $5,000 



to Masiello and the balance to MBM 



30 



Masiello testified to the Commission 



31 ~ l 2 

that Mansueto agreed to this idea, so MEM submitted the invoice,^ Masiello 



approved it, 33 and the $8,928.15 was paid to MBM on June 8, 1971 



34 



MBM 



never paid Masiello his $5,000 share, according to Masiello's testimony. 



35 



27 William Masiello testimony, Sp. Comm. 6/24/80 at 29. 

2£ ee P. A. Report, Appendix 36, Citizens' Research Foundation Listing of 
PoliTTcal Contributions of $500 or More in 1970, edited by Herbert E. Alexander 
and Katherine C. Fischer, entry for contributions filed in Massachusetts, James 
A. Kelly, Jr. 

25 P. A. Report at 67-65. In addition to being illegal on MPM's part, it would 
have been illegal for the White campaign to have accepted the check if it 
recognized that it was really a launoered corporate contribution from ^^V rather 
than a bona fide personal contribution frorr Kelly or Masiellc. G.L. c.55 ss.8, 10, 

30 William Masiello testimony, Sp. Comm. 6/24/60 at 32-33. 

31 Id. 

32 mbm statement to Frank P. Masiello, Jr. anc Associates refereneino invoice 
y/6272 dated 12/31/70 and #8424 datec 3/22/71 in the amount of $8928.15 for job 

no. 445-C35. 

33 Letter catec May 26, 1971 from William V. Masiellc tc Worcester County 
Commissioners, concerning the approval of an invoice from MEM. 

3^ Check #1025 on the account of Worcester County Prison Colony Loan Act of 
1565, catea June 6, 1571 payable tc MBM in the amount of $8926.15. 

35 William Masiello testimony, Sp. Comm. 6/24/8C at 33-35. 



The Commonwealth of Massachusetts 

State Library of Massachusetts 
State House, Boston 




Final Report 

To The General Court 

Of The Special Commission 

Concerning State And County Buildings 



December 31, 1980 



Created by 
Chapter 5 of the Resolves of 1978 
.-> as amended by Chapter 1 1 of the Resolves of 1979 

J and by Chapter 257 of the Acts of 1980. 

) 



VOLUME 3 




( In- 
state I i! of kuse] 
State H. ;e, Boston 



K 
6" 



v.3 

9v_ 



VOLUME III 



DESCRIPTION OF FINDINGS IN INDIVIDUAL CASES: AWARD OF DESIGN CONTRACTS 



TABLE OF CONTENTS 



A flew Campus For Holyoke Community College 1 

Background of the Holyoke Project 2 

The DMJM/Masiello Relationship 4 

Df'JM's Interest in Massachusetts \ 

"An Architect Who Was Politically Connected" 5 

Masiello's Strategy to Win A Contract 6 

"Payment of Money in Consideration for Obtaininq Contracts" 

The Selection Process - Official and Unofficial 9 

A Call From Toots Manzi 10 

"He Would Completely Wash His Hands of Me" 10 

What Manzi Reauired 11 

Masiello's Trip to California 12 

Masiello's Guidelines: No M oney Up Front 13 

Masiello's Negotiations with Manzi 14 

The Mechanics of Making the Contribution 15 

Masiello Comes to Terms with Manzi 16 

The Acquisition of the Contract 17 

Smith Meets Manzi and Makes the Oeal 18 

Manzi Recommends MBM 19 

The DSB Interview 20 

The Commissioner's Selection 21 

The Project Begins 23 

Manzi 's Weekly Calls to Masiello 1% 



1 1 - 



DMJM's First Payment to Manzi 

Manzi Monitors for Payments to DMJM 

DMJM's S5,000 Check 

How the Check was Cashed 

The Delivery to Manzi: "Is That All?" 
Preparation of Plans and Specifications 

The Masiello - DMJM Contract Dispute 

DMJM's Differences with Manzi* 

The Masiello - DMJM Meetino in Washinton in June, 1970 

The Sonesta Hotel Meeting in July, 1970 

The BBC fleeting on Costs 
The Second Delivery to Manzi 

"What in Hell am I Go inn to Do with Five-Oollar 3ills?" 

Manzi 's Pressure Continues 

"Deadbeats" 

The Proiect Goes Forward 

"I am Under a Lot of Pressure from My People" 
DMJM's Third Delivery to Manzi 

The California Cashier's Checks 

Masiello 's Continuing Contract Dispute with DMJM 

Kussman Reviews the Contract for Masiello 

Masiello 's Further Negotiations with DMJM 
DMJM's Fourth Delivery to Manzi 

More Cashier's Checks 

Further Masiello - DMJM Negotiations 
DMJM's Fifth Payment to Manzi 
DMJM's Continued Services for Phase II 

Masiello Uses Manzi's Leverage over D'<JM 

Masiello Uses Influence in the BBC as Leverane over DMJM 
DMJM's Sixth Delivery to Manzi 
Masiello 's Trip to California 
The End of the Masiello - DMJM Relationship 
Concl usion 



26 
26 
27 
23 
29 
30 
31 
32 
33 
3* 
35 
36 
37 
39 
39 
40 
41 
43 
^3 
44 
*5 
46 
13 
49 
51 
52 
53 
53 
54 
56 
58 
60 
63 



Ill - 



Masiello: If A Hand Is Ooen 

The Masiello Strateny: Filling the Open Hand 

Masiello's Backaround 

The Public Relations Approach 

Winina and Dining 
Masiello's Record of Obtaining State and County Projects 

3rief History of the Firm 

Public Architecture the Main Work of the Firm 
The Investigation 
Cash feneration 



11 

22 

■14 
55 
66 
66 
66 
77 
14 
17 



Frank Masiello in the 1 960 ' s : The Education of A Political Architect 
Introduction 

The Best Way to Continue Contracts 
The Connelly School: A Very Slim Year 
The Gentile School Project 
MCI Norfolk: A Job Mot Worth Goino After 
Manzi Puts Pressure on Masiello 
"This Is Coming Out of My Hide" 
More Money Authorized for the ^entile Project 



Over Two Million Dollars in Design Fees *or the Masiello Fi 



rm 



23 

23 
24 

27 



28 



31 
32 

33 
35 
35 



How Masiello Used Political Contributions As "Door Openers" 
To Suffolk County Contracts 

Introduction 

Masiello's Political Fundraising. Activities: The Door Opener 

Vey's Fundraisino Activities: The Political Boiler Room 

The Dudley - Harrison Fire Station 

An Unusual Desianer Selection Procedure 

An Erroneous Fee Calculation by Vey in Masiello's Favor 

A Phony Change Order to Fund a Political Contribution 

The Charles Street Jail/Deer Island Project 
Another Unusual Selection Procedure 
The Connection Between Contributions and Contracts 
Keeping the City "Out of the Prison Business" 
Overpayment of Desion Fees Through Padded Time Records 
"I Became Part of His Scheme" 



37 
37 
37 
40 
44 
44 
46 
47 
50 
50 
53 
54 
55 
58 



- 1 V 



Designinq A Summer Home for Sheriff Eisenstadt 

A "Larne, Assumina Home" 

Taxpayers Foot the Bill 
Conclusion 



59 
59 
51 
61 



The Masiello Firm's Series of Contracts with Worcester County 



55 



Shrewsbury Housing Authority 
Introduction 

One Version of the SHA Selection Process 
The Possibility of a New Selection Procedure 
William Masiello's Pursuit of SHA Work 
An Increase in Fees for the Masiello Firm 
Payments to Masiello 4 Associates and Payments on a Promise 



38 
88 
88 
91 
92 
96 
98 



Taunton Housing Authority 
Introduction 

Background to the Contract Award 
Payments 
Fundrai sing 
Kitchen Cabinets 



105 
105 
106 
108 
111 
112 



Fall River Housing Authority 



115 



Masiello's Strategy to Win the Springfield Mental Health Center Contract 1 22 

Introduction 122 

The Unexpected Loss of the Bristol County Jail 122 

The Beoinning of A New Strategy 124 

Truce Discussions 124 

Making Peace With Zuchero 125 

Becoming One of Three 126 

"Serenading" Kerr for His 0S3 Vote 126 

Lining Up the Vote of the BBC 127 

Masiello Re-Contacts Zuchero 128 



- V 



The Final Step in the Plan 

Input Into Designer Selection: Whose Checkmarks 

The Winning of the Springfield Project 

Masiello Makes Good on His Commitment 

The Project Dwindles to a Halt 

Concl usion 



130 

132 
134 
135 
138 
138 



A NEW CAMPUS FCR hOLYCKE COMMUNITY CCLLEGE 

On March 25, I960, Frank R. Masiello, Jr., became the first witness to 
testify in public before the Special Commission about corruption in the award of 
cesign contracts for state projects. That day, he testified that the Los Angeles 
architectural firm of Daniel, Mann, Johnson, Mendenhall (known in the trade as 
"DMJM") agreed to pay a large sum of money to Republican fundraiser Albert P. 
"Toots" Manzi to secure a multi-millicn-dollar contract to design a new campus 
for Holyoke Community College in Holyoke, Massachusetts. So far, the 
construction contracts on the project have cost the Commonwealth over $26 
million, and the Commonwealth has paid OMJM approximately $1.7 million in 
architectural fees. 

Frank Masiello testified about the Holyoke Community College project for more 
than two days. Seventeen other witnesses, including William V. Masiello, later 
testified before the Commission about the project. Albert Manzi appeared before 
the Commission, but exercised his constitutional privileges against 
self-incrimination and refused to answer questions. The Commission reauested 
that officials of DMJM appear and testify, but they refused. They could not be 
compelled to do so since they were outside the Commonwealth beyond the 
Commission's power to subpoena. 

The following integrates the testimony of those witnesses, as well as other 
information obtained by the Commission, into a single account of the award of the 
design contract for the Holyoke Community College (HCC) project and of the 
subsequent design and construction of the project. Information has been selected 
for inclusion in this account to answer the main question, "How did Daniel, Mann, 
Johnson, Mendenhall obtain the contracts to design Phase I and Phase II of the 
HCC project?" 

The following account is a detailed one. The Special Commission chose to 
investigate this project more deeply than any other except the M6M UMass/Boston 
construction management contract. It did so for several reasons. The HCC 
project was a major one, in taxpayers' dollars and in its importance to the 
people of western Massachusetts. The first contract was let in 1968, the 
earliest year within the Commission's mandata, and parts of the projet are still 
under construction today. Many witnesses and documents were available to give 
the Commission information on this project; the investigation did not have to 
rely on evidence from only one or two witnesses. There were striking parallels 
between the evidence of crime in the award of this contract and such evidence in 
the award of others — especially the MBM contract. The similarities in timing, 
people, and events between the DMJM and MBM contracts appear to be remarkably 



- 2 - 

ciose. 

For -those reasons, the Commission heard extensive evidence about the sele of 
the HCC design contract by Toots Manzi to CMJM. In doing so, the Commission also 
wantea to test the memories of the witnesses before it. The following account 
reflects the particularity of the Commission's investigation. 

EACKGRGUNO CF THE HOLYOKE PROJECT 

On the afternoon of January 4, 1968, the main building of Holyoke Community 
College burned down. The building had housed Holyoke High School from 1898 to 
1964, then had been renovated at a cost of over $800,000 to the Commonwealth and 
had become the new home of the community college.* The renovation project was 
completed only a few months before the fire. After the fire, the college 
continued to operate in its annex building ano in borrowed rooms throughout the 
city . 

The residents of Holyoke feared that the Massachusetts Board of Regional 
Community Colleges (ERCC) would decide not to rebuild Holyoke Community College, 
but instead close down HCC and expand Springfield Technical Community College to 
serve the Holyoke area as well. 

A few days after the fire, Holyoke Mayor William Taupier, Holyoke Community 
College President George Frost, State Representative David Bartley, and others 
met with Theodore Chase, Chairman of the BRCC, and other state officials to 
discuss the future of the college. Although no decisions were made at the 
meeting, the desire of the residents of Holyoke to rebuild the college was 
expressed both at the metting and through a letter-writing campaign to Governor 
Volpe and Chairman Chase. At its next meeting on January 12, 1968, following 
a presentation by a delegation from Holyoke, the ERCC voted unanimously to allow 
HCC to remain in Holyoke. 2 

At the BRCC meeting on February 9, 1968, Holyoke Community College was again 
prominent on the agenda. First, Chairman Chase reported that Senate President 
Maurice Donahue (of Holyoke), House Ways 4 Means Committee Chairman Anthony 
Scibelli (of Springfield), and Representative David Eartley (of Holyoke) had 
assured him that money for construction of a new Holyoke Community College campus 
"would be forthcoming, over and above money needed for the other colleges." 
Second, the boaro vdted preliminarily to choose the property offered by the City 



♦ BBC project EJ 64-1 #3. Architect: Perry, Shaw, Hepburn. Contractor: 

Carpenter, Inc. Construction contract award price: $791,087. Source: BEC 
project progress records. 



- 3 - 
of Holyoke as the site for the new campus for building purposes. Finally, the 
Eoaro voted to recuest the Governor to file a special message with the 
Legislature asking for a capital outlay appropriation of SI, 100, COO for Holyoke 
Community College (specifically, for the envelopment of a master plan for a 
college to serve 4,500 stucents, preparation of working plans and specifications 
for a first phase to accommodate 2,500 students, and preparation of the site). 

Chase wrote a letter to Governor Volpe on February 12, 1968, in which he 
thankea the Governor for his personal interest in the "tragedy" at Holyoke 
Community College. He conveyed the Board's request for $1.1 million, and 
informed him that land would be donated by the City of Holyoke. It was not until 
nearly a month after Chase's letter to the Governor was actually sent that the 
ERCC voted on March 8, 1968 to accept the site from the City of Holyoke and to 
authorize the Chairman to reouest that the Governor send a special capital outlay 
reauest to the Legislature 4 

Governor Volpe submitted his special capital outlay reauest for Holyoke 
Community College to the Legislature on April 2, 1968. His reauest was 
identical to that of the BRCC: $1,100,000 for preparation of a master plan, 
preparation of plans for site preparation and Phase I, and construction expenses 
for a site preparation contract, "provided that land is granted free to the 
Commonwealth by the City of Holyoke." 

The special capital outlay bill was reported favorably out of the House Ways 
and Means Committee on April 24, 1968 with one major amenament — that the $1.1 
million be usea only for preparation of plans, and not for the preparation of the 
site. Under suspension of the rules of the House, the bill was read three times 
that day, passed to be engrossed, and sent up to the Senate for concurrence. 
On May 2, the bill was passed to be engrossed. The bill was enacted by both 
chambers on May 8, 1968, and Governor Volpe signed the bill into law on May 14, 
1968. The bill contained an emergency preamble, so that it became law as soon 
as Governor Volpe signed it, only six weeks after he submitted his special 
capital outlay request. 

The appropriation of $1.1 million insured that Holyoke Community College 
would survive, and that it would have a new facility within a few years. In the 
meantime, the City of Holyoke began to plan a temporary building to house the 
college until 1972, when the new campus was expected to be ready for occupancy. 
In March 1968, George Mallis Associates of Springfield was hired to design a 
conventional school building which could be adapted for other uses in the 
future. A construction contract was later awarded to Fontaine Eros. Construction 
Co. of Springfield. The estimated $600,000 to $700,000 cost of the project was 
financed from the $1.5 million in insurance proceeds from the fire which had 



- A - 

destroyed the main community college building. The interim building was 

Q 

completed in January 1969, and used by the college until 1974. 

THE DMJM/MASIELLO RELATIONSHIP 

CMJM's Interest in Massachusetts 

Daniel, Mann, Johnson, Mendenhall, a California-based firm and the eventual 
architects of Holyoke Community College, had for some time been actively pursuing 
a contract to design a community college in Massachusetts before it received the 
Holyoke contract. However, that contract was the first fruit of its efforts in 

» 

the state. 

According to Frank Masiello, DMJM had a very broad clipping service, and 
through the clipping service OMJM learned that several community college projects 
were being planned in Massachusetts. OMJM felt confident that an out-of-state 
firm could win such a contract because one of its major competitors in 
California, Ernest J. Kump Associates, had received a contract in 1966 to design 
a new campus for Greenfield Community College. 

Representatives of OMJM, particularly Stanley Smith and Bruce Ounsmore, made 
a number of trips to Massachusetts to solicit work for OMJM. They approached 
officials of the BRCC, including President William Owyer and Executive Director 
John Costello, to express interest in obtaining a design contract from the 
Commonwealth. They may also have visited officials of local community colleges. 
Costello and Dwyer were already familiar with OMJM; they had seen exhibits by 
OMJM at conventions of the American Association of Junior Colleges. OMJM 
displayed models and photographs of community colleges designed by the firm, 
distributed literature, and even took people on a tour of a DMJM-designed college 
if one were located nearby. Costello remembers meeting Smith at those 
conventions and Dwyer similarly remembers meeting Dunsmore. 

Daniel, Mann, Johnson, Mendenhall was one of 78 firms to apply for a contract 
to design a new campus for Mt . Wachusett Community College in Gardner, 
Massachusetts following public advertisement of the project by the Oesigner 
Selection Board in October 1967. n The BRCC itself favored OMJM for the 
project: it voted on March 8, 1968 to recommend that DMJM be named one of the 
three finalists for the Mt. Wachusett project. 12 DMJM was nominated as a 
finalist for the project (EJ 68-1R) by the Designer Selection Board, but the 
contract was awarded to Hugh Stubbins Associates of Cambridge, Massachusetts by 
the Commissioner of Administration and Finance (A&F), Anthony P. DeFalco, on 
March 25, 1968. 13 Stubbins won out over The Architects Collaborative, another 
Cambridge firm, and DMJM. 



On March 13, 1968, DMJM was chosen by the Designer Selection Board to be one 
of seven semi-finalists for another eaucation project: BBC Project U68-4.R, a 
study for the Life Sciences Building at the University of Massachusetts at 
Amherst. CMJM was not named a finalist for this project by the Designer 
Selection Board. - 

DMJM was handicapped by being an out-of-state firm. Nearly all design 
contracts awarded by the A4F Commissioner since the creation of the Designer 
Selection Board had been awarded to Massachusetts firms. Ninety seven percent of 
finalists for the 87 projects awarded from the creation of the Board in late 1966 
through the award of the Holyoke project in July 1968 were Massachusetts firms. 
During that period only four out-of-state firms were nominated as finalists for 
projects (DMJM twice), although many out-of-state firms submitted applications 
for projects. 

It was clearly a disadvantage to be an out-of-state firm seeking a design 
contract from the Commonwealth of Massachusetts, even though the out-of-state 
firms were chosen for the contract by the Commissioner en three of the five 
occasions on which they were nominated. 

"An Architect Who Was Politically Connected" 

In late April or early May 1968, Frank Masiello received a telephone call 
from Stanley Smith of DMJM. The two men had never met, so Smith identified 
himself as Vice-President of DMJM in charge of its educational facilities project 
development. He told Masiello that DMJM was interested in designing a community 
college for the Commonwealth of Massachusetts, but he did not mention a specific 
project. Smith suggested that DMJM and Masiello's firm might be able to form an 
association to pursue a contract, with DMJM providing expertise in the design of 
community colleges and Masiello 4 Healy providing expertise in "doing business 
with the Bureau of Building Construction." They agreed to meet later to discuss 
further the possibility of jointly pursuing a design contract. 16 

Why did Stanley Smith call Frank Masiello? Masiello believes that someone 
suggested that DMJM associate with a "Massachusetts architect who was politically 
connected," and thereby overcome the disadvantage of being an out-of-state 
firm. 17 Smith was surely aware that Frank Masiello was "connected" since he 
knew that Masiello had been successful in obtaining state design contracts. He 
told Masiello that one of the reasons he was calling was that Masiello 4 Healy 
had "a lot of ... projects with the Commonwealth"- 10 

The then Deputy Director of the Bureau of Building Construction, Walter J. 
Poitrast, remembers an inquiry from Stanley Smith as to whether Masiello 4 Healy 
would be acceptable to the BBC as a consultant for construction supervision on a 



- 6 - 

project. 15 

why aid Smith choose Masiello & Healy over all the other architectural firms 

in the state? One reason must have been previous association between the two 

firms. They first became associated in 1964, when they jointly pursueo a 

contract to design an electronics research laboratory in Cambridge for the 

National Aeronautics and Space Administration. They also jointly sought several 

2C 

other projects over the years, but were never successful in obtaining one. 
At one point, OMJM used Masiello 4 Healy's Boston office as its Massachusetts 

21 

aadress and had its name paintea on the door. 

In the spring of 1968, soon after their phone conversation, Stanley Smith and 
Frank Masiello met at the Statler Hilton Hotel in Park Sauare, Boston. Masiello 
testified that they went downstairs to the cocktail lounge at Trader Vic's and 
had a couple of cocktails before dinner. Over dinner, they discussed strategy 

for obtaining a contract to design a community college. The meeting lasted 

22 
between two and two-and-a-half hours. 

Smith told Masiello that "he and his people ... had been to various parts of 

the state interviewing the people connected with the community college program 

including John Costello." He said they had also talked with "people in the 

legislative area," "members of the architectural selection committees" and 

officials of the BBC. 23 Despite these efforts, Smith said, DMJM had not been 

successful in obtaining a design contract from the Commonwealth. 

Masiello's Strategy to win a Contract 

Frank Masiello explained the designer selection process to Smith, then 
suggested the following two-pronged strategy to obtain a contract: (1) set up an 
unofficial interview with the BEC at which DMJM and Masiello could present their 
qualifications to design a community college; and (2)meet with AAF Commissioner 
DeFalco for the same purpose. 

This strategy was pursued as follows: 

(1) Frank Masiello believed he could set up the interview with the BBC 
officials since he was friendly with them as a result of his many state 
contracts. The interview would have two purposes: (A) to increase DMJM's 
chances of being interviewed by the Oesigner Selection Board for a community 
college project; and (B) to try to win the vote of the BBC Director who was a 
member of the Board. 

(A) Frank Masiello testified, "I was aware that the Designer Selection Board 
woula have one or two of its members consult with high-level staff members of the 
Bureau of Building Construction ... to [screen] the applicants and [cut] the 
number of applicants to a few that would eventually be considered for interviews, 



- 7 - 

and then the Designer Selection Eoard would further cut the list of applicants to 
a few that they were interviewing, usually anywhere from four to six firms." 
Frederick J. Kussman, then Executive Secretary of the Designer Selection Eoaro, 
was icentified as one of the EBC officials involved in the preliminary screening 
of applicants for design contracts. Ey making Kussman, and other EEC officals 
involved in the screening process, aware of DMJM's oualif ications , the firm's 
chances of being interviewed by the DSB would be increased. 

(B) Masiello testified: "I told Mr. Smith that the Director of the Bureau of 
Building Construction, then Horace Chase, had a vote Con the Cesigner Selection 
Board], and in his absence ... Mr. Poitrast ... hac the vote for the Bureau." 
winning even one of the seven votes on the DSB could make the difference between 
being nominated or not being nominated as a finalist for a project, particularly 
since the Designer Selection Board used a weighted voting system which assigned 
greater importance to a first-place vote than to lower-priority votes. The vote 
of the BEC Director, combined with the connections OMJM had already established 
with the Board of Regional Community Colleges, would put DMJM in a very 
advantageous position. 

(2) AAF Commissioner DeFalco would actually choose the designer for a 
project from a list of three names submitted to him by the Designer Selection 
Eoard. Masiello felt he could set up the meeting because DeFalco knew him to be 
an active supporter of Governor Volpe, as well as an architect with a lot of 
state contracts. 2A Masiello believed that "having Smith and other 
representatives of [DMJM] go up to the Commissioner's office with someone from 
our firm would stick in Mr. DeFalco's memory, the fact that we were a 
Massachusetts firm associated with an out-of-state firm." Smith said that 
Masiello's strategy seemed to be "a fine approach." 

"Payment of Money in Consideration for Cbtaining Contracts" 

Masiello also told Smith that OMJM might be expected to make a "political 
contribution" in order to receive a design contract, even though his strategy of 
introducing DMJM to top officials of the BBC and to the Commissioner of A&F was 
intended to obviate the need for such a contribution. Masiello testified, "I 
explained to him [that] normally a political contribution was a contribution of 
money to a political party to elect a person who was seeking public office. Eut, 
in this particular case, I indicated to him that the word political contribution 
was more of a guise, and it was payment of money in consideration for obtaining 
contracts . " 

Masiello told Smith that Albert P. "Toots" Manzi, a powerful political figure 
in Worcester, a member of the Massachusetts Turnpike Authority, and a chief 



- a - 

fundraiser for the Volpe administration, might approach them for a contribution. 
He saia, "I knew if Toots [got] wind of the fact that we were attempting to get a 
project without going through him, that in all probability if we didn't make a 
political contribution . .-. the possibility of getting a contract would be slim or 
virtually impossible." He explained Manzi's power to Smith: "I knew that if 
anyone was seeking any jobs or seeking some form of patronage, that Toots Manzi 
... would ... get the job done...." Furthermore he said Manzi "pretty much came 
and went as he wanted at the State House." 

Masiello told Smith that he was familiar with Manzi because he had previously 
given "contributions" to Manzi in order to receive state contracts. Masiello 
said that he called the payments "contributions" because "Mr. Manzi was always 
referring to payments of money as political contributions for the campaign, 
whether there was a campaign going on or not." 

According to Masiello, Smith said that DMJM "didn't want to be involved in 
making contributions when at all possible [but] he stated that DMJM would 
consider the possibility if and when it arose." Masiello said, "it didn't appear 
that [Smith] was particularly alarmed [about] the fact that the possibility of a 
political contribution might be a consideration in acouiring a contract because 
he had told me that this had happened to their firm throughout the world on other 
projects. " 

When discussing Masiello i Healy's role in any project which DMJM might 
acquire in Massachusetts, Smith and Masiello decided that Masiello 4 Healy would 
"assist [DMJM] in the programming and master planning of the project.... 
Secondly, if there were more than one building in the complex ... we would do the 
construction drawings and some of the design on one of the buildings. Then, much 
later on, we would handle the majority of the contract administration" and 
"liaison" with state agencies. 25 

A short time after the meeting with Smith at Trader Vic's, Masiello called 
Horace Chase to arrange an interview for DMJM with the B8C. It took place in 
April or May, 1968 at the BBC offices in the Saltonstall State Office Building. 

Masiello attended the meeting along with Smith and Bruce Dunsmore. The BBC 
was represented by Horace Chase, Walter Poitrast, Fred Kussman, James Cusack, and 
possibly two or three others. Masiello testified: "DMJM made an extensive pitch 
as to their ability in the area of community college and university 
development." The firm made an oral and slide presentation "supported by 
brochures which they had prepared specifically for this occasion." 

Masiello described the reaction of the BBC officials as "auite 
favorable." 26 He asked if OMJM could be considered for a project — even 
though it was an out-of-state firm. "The general consensus [among the BBC 



- 9 - 
officials] was yes, because it was not unusual when jobs of this size were 
involved, and especially because DMJM was coupled with a Massachusetts firm." 27 

Either the same day as the BBC interview, or the next day, Frank Masiello 
took Smith and Ounsmore to meet Commissioner DeFalco. 

The four men met briefly in OeFalco's State House office. Masiello explained 
to DeFalco that DMJM was an out-of-state firm interested in designing a community 
college for the Commonwealth, and that Masiello 4 Healy, a Massachusetts firm, 
would play an important role in any project awarded to DMJM. He also told 
DeFalco that DMJM had made a presentation to the BBC of its Qualifications for 
such a project. ^ 8 

DeFalco, when asked by the Commission, said he did not recall any such 
meeting with Smith, Dunsmore and Masiello. However, he tesfified: "While I was 
the Commissioner of Administration & Finance I operated as much as possible on an 

29 

open-door policy. Those who wanted to see me for any reason saw me." 
THE SELECTION PROCESS - OFFICIAL AND UNOFFICIAL 

Commissioner OeFalco referred the Holyoke Community College project to the 
Oesigner Selection Board on May 21, 1963. The project was designated BBC project 
EJ 68-2 at that time, and the estimated construction cost for the entire project 
was set at $9 million. ° 

The OSB advertised the Holyoke project on May 23, 1968, but it already knew 
that many architects were interested in obtaining the contract. Architects had 
begun to write letters to the Board indicating their interest in the project as 
early as March, 1968. Daniel, Mann, Johnson, Mendenhall of Los Angeles, 
California, and Masiello 4 Healy of Worcester, Massachusetts were among the 76 
firms which submitted applications for the project. 31 

DMJM's application was submitted by Bruce Dunsmore from its Washington, OC 
office. He stated that DMJM had recently established an office in Cambridge, 
Massachusetts at 201 Alewife Brook Parkway. However, research by the Commission 
found that a shoe store is now located at the address; in 1968, it was a branch 
bank. It does not appear that OMJM ever had an office at that address. 

While the OSB solicited applications from designers, Holyoke Community 
College established its own architect selection committee. The Committee was 
chaired by Donald Owight, then a Holyoke newspaper publisher; the secretary of 
the committee was Alberta Settle of East Longmeadow. 



1C 



A Call From Toots Manzi 



In late May or early Curie, 1968, Frank Masiello received a telephone call 
from Albert P. "Toots" Manzi at his office at 791 Main Street in Worcester. 
Manzi told Masiello that he knew he was pursuing the Hclyoke Community College 
project with a firm from California. Manzi asked Masiello to come down to 
Manzi's Market on Shrewsbury Street in Worcester to discuss it. Masiello knew 
where the market was located because he had gone there numerous times to discuss 
political contributions with Manzi. 

Masiello testified that he was "Quite disappointed that [Manzi] found out 
that DMJM and [Masiello & Healy] were after the project, because I hoped that we 
could obtain a contract of this magnitude based purely on merit and 
Qualifications, rather than a political contribution being a necessity." 

Immediately after finishing his phone conversation with Manzi, Masiello 
called Stanley Smith at OMJM's offices in Los Agngeles and told him the 
"disturbing news" of the call from Manzi. He told Smith that Manzi might ask 
them for a "political contribution." Smith again said that DMJM wanted to avoid 
making a contribution, but he did not rule it out entirely. He told Masiello to 
go ahead and find out what Manzi wanted, then to call Smith back and let him know 
what haa happened at the meeting. 

In the early afternoon, Masiello drove to Manzi's Market. He recalled the 
incident in detail in his testimony before the Commission. The trip took only 
about ten minutes, when he entered the store, Manzi was working behind the meat 
counter. He asked Masiello to wait for a few minutes while he served a 
customer. When he finished, Manzi suggested that they go for a ride because he 
felt like having an ice cream cone. They drove towards West Boylston in 
Masiello's car, along Route 12 through West Boylston, then a short distance to 
the left along another road. They drove to the Pinecroft Dairy, which was 
located in a large open area — somewhat like a town sauare. Masiello pulled 
into the parking lot and parked under a large tree. The two men walked to the 
window and purchased chocolate ice cream cones. They ate them while leaning 
against Masiello's car, in the shade of the tree. 

Until then their conversation had been general; then Manzi asked Masiello how 
interested he and DMJM were in obtaining the Holyoke Community College contract. 
Masiello replied that they were Quite interested in the project. 



"He Would Completely Wash His Hands cf Me" 

Manzi told Masiello that he was upset with him for going in to see 
Commissioner OeFalco and BBC Director Chase without consulting with Manzi first. 
He told Masiello that "He would completely wash his hands of [me] and anything he 



- 11 - 

haa to do with [me]," if Masiello continued to try to go around him. 

Masiello was surprised that Manzi knew about the meetings with DeFalco and 
the BBC officials, but he felt certain he knew how Manzi found out. Masiello 
testified that Manzi "had a lot of people that owed him their jobs in various 
departments in the State House, and there wasn't much that went on in the State 
House that Mr. Manzi wasn't immediately apprised of by his people."' 

Manzi told Masiello that he- was keeping DMJM alive on the Holyoke project 
because of its association with Masiello's firm. He said that because of his 
efforts DMJM was one of a few firms being seriously considered for the Holyoke 
project. Manzi then said that if DMJM were successful in obtaining the contract 
because of his help, a political contribution to the administration of about 
$70,000 to $80,000 would be expected. A contribution of that magnitude would 
have taken approximately 10% of the architectural fees on the $9 million Holyoke 
Community College project. (Architectural fees are calculated as a percentage of 
the estimated construction cost or, later, the actual construction cost of a 
project. The fees on a $9 million project would have been approximately $700,000 
to $800,000.) 

Masiello "understood him to mean that the political contribution was a guise 
of a payment of money to obtain a contract for which a firm was under 
consideration." In fact, Masiello testified he began using the euphemism after 
first hearing it from Manzi. 

Masiello said, "I was quite taken aback ... because I had no idea he was 
looking for ... that kind of political contribution." He told Manzi that he 
wasn't pleased to have to make a political contribution for the project, 
especially since he felt that DMJM was well qualified to design the prdject. He 
also felt that, "the amount of money that he was asking for the contract was just 
outrageous. There wasn't any way any architectural firm could hope to pay out 
that [much] money" and still make a profit on the job. 

What Manzi Required 

Manzi said that OMJM must agree to make a political contribution or it would 
not be awarded the contract — even if OMJM were nominated as a finalist on the 
project by the Designer Selection Board. On the basis of his previous 
experiences with Manzi, Masiello was sure that Manzi could block the selection of 
DMJM if it did not contribute. 

Masiello told Manzi that he did not have any authority to commit DMJM to a 
political contribution. He said that even if DMJM were willing to make a 
contribution, it would be a small one, certainly not as much as $70,000. When 
asked how much he thought DMJM would be willing to contribute Masiello replied, 



- 12 - 

Isss than $5, COO. Manzi said that wouldn't be enough to obtain the contract 
because he was unaer a lot of pressure to raise money for political activities. 

Manzi also said that contributions from CMJM would have to be made in cash. 
Frank Masiello asked if a contribution could be made by check payable to a 
political entity, but Manzi said he did not think checks would be acceptable. 

Finally, Manzi asked Masiello, point-blank, if he thought OMJM would be 
willing to make a contribution to get the contract. Masiello promised to call 
CMJM and find out, then let Manzi know. Manzi said that time was running short, 
because a decision on the award of the contract would have to be made ouickly. 
He warned that DMJM should not wait too long to make a decision. 

The conversation then shifted to another topic. Manzi reminded Masiello that 
he still owed him money for another project. The two men soon drove back to 
Manzi's Market; after dropping Manzi off there, Masiello returned to his office. 
The entire meeting, from the time Masiello arrived at the market until he dropped 
Manzi off again, lasted about one hour.^' 

Masiello called Stanley Smith in Los Angeles and told him about the 
conversation with Manzi. Masiello testified, "I told him that Manzi had told me 
that the only way that OMJM ... could be considered would be if a political 
contribution was part of the consideration; and if a political contribution was 
offered, [then] in all probability a contract would be forthcoming." Smith was 
auite taken aback by Manzi's demand for $70,000 to $80,000. He told Masiello 
that he did not want to discuss the possible deal over the telephone, and he 
asked Masiello to fly out to discuss it with him. 

Masiello's Trip to California 

Within a day or two, Frank Masiello and his wife flew out to California. 
They stayed at the Ambassador Hotel, at 3^00 wilshire Boulevard in Los Angeles, 
not far from DMJM's offices which were then at 3325 Wilshire Eoulevard. 

Masiello recalls his the trip to California as in the early part of June, 
1968 because he remembers people in Los Angeles remarking, "how congested and 
confused the area was right after [the] assassination of Robert Kennedy [on June 
5, 1968] for a day or two, onlookers going to see the site of the assassination." 

The day after he arrived in California, Masiello went to see Smith. DMJM's 
offices occupied several floors of the building, including one devoted to 
military projects and one devoted to educational facilities projects. Masiello 
waited in the lobby, looking at a world map with all of DMJM's offices identified 
on it, until Smith came to get him. 

Smith and Masiello met alone briefly, then they went to meet DMJM's chief 
fiscal officer and Smith's superior, Tevfik "Tef" Xutay. Frank Masiello had met 



- 13 - 

Kutay in 1964 when CMJM, and Masiello & Healy had pursued the NASA project in 
Cambridge. 

Masiello began by telling Kutay, "[I was ] embarrassed ... that I haa been 
caught like a little kid with his hands in the cookie jar when Manzi ... found 
out that I had attempted to ... get assigned a contract ... without his being 
involved or having knowleage of it." Then he described, in detail, what had 
occurred at his meeting with Manzi. He told Smith and Kutay that Manzi had taken 
credit for keeping OMJM in consideration for the Holyoke Community College 
project because of its association with Masiello & Healy, and that Manzi said he 
would stop pushing CMJM unless they agreed to make a political contribution of 
$70,000 to $80,000 in cash. He told them he believed Manzi had the power to keep 
CMJM from winning the contract. 

Masiello said, "When I mentioned the figure of $70,000 to $80,000 to Kutay, I 
almost sensed he was about to go into shock.... I don't believe he had ever heard 
of that kind of a number associated with political contributions." Smith and 
Kutay believec OMJM was as well, or better, Qualified as any other firm that 
might be consiaered, and had "a lot of friends in Massachusetts" as well. They 
felt their connections with President Frost of Holyoke Community College, John 
Costello of the BRCC, members of the Holyoke Community College architect 
selection committee, and other state and local officials ought to be sufficient 
to ensure DMJM's selection, despite Manzi. Kutay said, "Our firm just isn't 
interested in getting involved in political contributions." 

Masiello reiterated that DMJM could not win the contract without securing the 
assistance of Manzi through a substantial campaign contribution. Then Smith or 
Kutay suggested that Masiello might reopen negotiations with Manzi and move him 
off his position of asking for $70,000 to $80,000. They first said they would 
like to contribute less than $5,000. They then discussed, at some length, what 
OMJM would do if Manzi would not accept $5,000, and decided that OMJM might be 
willing to contribute as much as $22,000. But they did not decide to agree to 
make a contribution. 

Smith and Kutay also said they would feel more comfortable about making 
"legal" campaign contributions through personal checks from various officers of 
the firm payable to political committees, rather than making cash contributions. 
Masiello said he thought it might be possible to give checks, but he knew, from 
his own past experience, that Manzi preferred cash. 

Masiello's Guidelines: No Money Up Front 

Masiello also suggested two guidelines for any deal: (1) that payments on 
the commitment not begin until OMJM began receiving it fees on the project; and 



- 14 - 

(2) that the amounts paid to Manzi be pro-rated to the amounts received by DMJM. 
He told the* that he suggested the guidelines because he had, in the past, mace 
political contributions for contracts "up front," and, when the contract never 
really cot moving, there wasn't anyone who was going to give his money back. 

At one point, Kutay said he had to make a private telephone call. Smith and 
Masiello left Kutay's office, and Smith took him to meet Harry Clausen. Clausen 
was introduced as the person who would be the project manager if CMJM were 
selected for the Hclyoke Community College project. Smith left Masiello and 
Clausen alone. Masiello said, "I presume [he] went back and had a further 
discussion with Tef Kutay." He was gone for 20-30 minutes before he came and 
brought Masiello back to Kutay's office. 

After their private conversation, Smith and Kutay tele Masiello that they 
still felt that, if at all possible, DMJM should avoid making a political 
contribution to get the contract. But they asked Masiello to talk to Manzi when 
he got back to Worcester and see how serious he was about wanting such a large 
amount. After Masiello talked to Manzi, he would report back to DMJM and a final 
decision would be made on the campaign contribution. 

After Frank Masiello's meeting with Smith and Kutay, he and his wife returned 
to Worcester. He called Toots Manzi and told him that he had gone to California 
to talk to the officials of DMJM. He asked to come down and discuss the Holyoke 
project with him again. Manzi agreed, and asked Masiello to come down to his 
market, within a few minutes, Masiello did so. In his testimony he recounted 
the meeting in detail. 

When he arrived at the market, Manzi was preparing meat for display. He was 
wearing a blue sweater and a white apron, his customary attire around the store. 
Manzi took Masiello into the back room. "It was a large storage room that was 

piled with boxes of different types of foodstuff [s] and wine and beer They 

had a lot of cartons stacked two or three high, and it seems to me we just leaned 
against one of those low stacks." 

Masiello's Negotiations with Manzi 

Masiello told Manzi that he had no firm decision from DMJM about a political 
contribution to obtain the Holyoke contract. Manzi responded that not much time 
was left before the DSB would notify the architects who had been selected to be 
interviewed for the project. Manzi said that DMJM must decide ouickly whether it 
wanted to be considered for the contract. He reminded Masiello that other firms 
were in the running, and that OMJM would not be selected unless it contributed. 

Masiello then told Manzi that the main problem was the amount of money he was 
asking for the contract: $70,000 was "way out of the Question," but a $3,000 



- 15 - 
contribution might be possible, Manzi reiterated that he was under "a lot of 
pressure to secure a lot of money for the upcoming political activities of the 
aaministration , " so he wouldn't be able to get "his people" to go along with such 
a nominal amount. He suggestea a contribution of 5% of the architectural fees on 
the project (or about $35, GOO to $40,000), but Masiello said that was still out 
of the Question. 

They continued to negotiate. Masiello said, "I kept coming up from the five 
and going towards the twenty and he kept coming down from the seventy to ... the 
$30,000, $40,000 range." Finally, Masiello said that if OMJM decided to make a 
contribution at all, he doubted that they would consider anything more than 
$20,000 to $22,000. Manzi said he didn't think that was enough for the project, 
and that he didn't believe he could convince "his people" that the contract award 
should be made for that sum of money. If they did accept the $20,000 to $22,000 
offer, he would expect the contribution to be increased proportionately in the 
event that the fees on the project increased later on. Furthermore, he stated, 
payments must be made in cash. The meeting ended without any final decision.^ 

Masiello returned to his office at 791 Main Street and placed a telephone 
call to Smith. He told Smith that Manzi had moved from his position of wanting 
$70,000 to $80,000, and that he might accept $20,000 to $22,000 for the contract 
— but in cash rather than by check. Masiello emphasized the need for a speedy 
decision, since the OSB would soon choose the firms to be interviewed for the 
project. Smith told him that he was still not sure that OMJM wanted to get 
involved in making a contribution, but said he would check on it and get back to 
him. 

Later that same day or the next day, Smith called Masiello to tell him that 
OMJM had decided to make a contribution — for the lowest amount that Masiello 
could negotiate with Manzi. 

The Mechanics of Making the Contribution 

Smith and Masiello discussed the mechanics of a deal with Manzi. They agreed 
to follow Masiello's two original guidelines: to begin making payments to Manzi 
only after OMJM began to receive fees from the Commonwealth, and to make each 
payment to Manzi in proportion to the amount received frcm the Commonwealth. 

Smith suggested that the contributions be made through Masiello & Healy in 
the guise of architectural fees. Masiello would invoice OMJM for fees from time 
to time, then generate cash to make payments to Manzi. When Masiello said that 
he did not want to be involved in the payments, Smith offered to give Masiello 4 
Healy additional money to take care of the extra corporate income tax liability 
caused by the fake fees from DMJM. Masiello still said no. He gave two reasons 



- 16 - 

for his decision: (1) he wanted to avoid problems with the Internal Revenue 
Service and (2) he "didn't want to be in the middle if anything didn't work out 
between Manzi and CMJM." 

Even though Smith agreed not to funnel payments through Masiello 4 Heaiy, 
that firm was going to be held responsible for a portion of the commitment tc 
Manzi. DMJM would generate the necessary cash, but Masiello & Healy's pro rata 
share of the payments would be deducted from its fee from DMJM on the project. 
If Masiello 4 Healy received 10% of DMJM's total fee, then an amount eaual to 1055 
of the total payments to Manzi would be deducted from Masiello & Healy's fee. 

Finally, Masiello suggested that Manzi and Smith meet to get to know each 
other and finalize the arrangement. Masiello told Smith that he wanted to make 
sure a direct line of communication was established between Smith and Manzi. 
Masiello was about to move to Florida and did not want to be relied upon as a 
go-between. Smith agreed to meet with Manzi. 

Shortly after his discussion with Smith, Masiello called Manzi, then went to 
Manzi's market. It was the middle of the afternoon and the market was not busy. 
Manzi was cutting meat at the end of the meat counter when Masiello came in; he 
continued to work during their conversation. 

Masiello Comes to Terms with Manzi 

Manzi asked Masiello if he had heard from DMJM, and Masiello replied that he 
had. Masiello told him that DMJM had decided to make a political contribution, 
but that they still had to decide the amount of the contribution. After some 
negotiation, Manzi agreed to accept $22,000 for the contract. 

Masiello told Manzi that, if the architectural fees on the project turned out 
to be less than expected, the campaign contribution should be reduced 
proportionately. Manzi retorted that he felt it would only be fair to increase 
the campaign contribution if the architectural fees turned out to be greater than 
expected. Masiello told Manzi he would have to discuss that with the DMJM people, 

Masiello then told Manzi that DMJM would start to make payments on the 
commitment only after it started receiving fees from the Commonwealth on the 
project, and, furthermore, that the payments would be in proportion to the amount 
received by DMJM. Manzi didn't like those conditions, and he said he would have 
to discuss them with "some people." 

Manzi then informed Masiello that OMJM was going to be interviewed for the 
Holyoke Community College project by the Designer Selection Board. He said they 
would shortly receive a notice to that effect from the DSB. 

Masiello asked Manzi if he would be willing to meet with Stanley Smith. He 
argued that it would be in his best interest to meet some representative of DMJM 



- 17 - 

in case Masiello moved to Florida and was no longer available to mediate 
conflicts between Manzi and DMJM. Manzi was reluctant to meet with Smith at 
first. Masiello testified, "I guess Manzi initially wanted to be isolated from 
any airect contact with the DMJM people." After further discussion, Manzi agreed 
to meet with Smith. Masiello told Manzi he would let him know when Smith would 

•to 

next be in Masssachusetts . ° 

Masiello called Smith to inform him of the success of his meeting with 
Manzi. He told him that OMJM was going to be interviewed by the OSE, and that 
Manzi had agreed to the $22,000 figure for the award of the contract. Smith 
thought that was fine. Masiello also told Smith that Manzi had agreed, albeit 

after some convincing by Masiello, to meet with Smith when he came to 

39 

Massachusetts . 

At its 46th meeting (on June 12, 1968) the DSB chose four firms to be 

interviewed for the Holyoke Community College project on June 26, 1968: Daniel, 

Mann, Johnson, Mendenhall; Gruzen and Partners of New York; Alderman and MacNeish 

of West Springfield, Massachusetts; and Oeeter, Ritchey, and Sippel of 

Pittsburgh, Pennsylvania. The selection of the firms to be interviewed was the 

only item of new business conducted that day. The minutes of the meeting 

describe the selection process: 

Mr. George Frost, President of Holyoke Community College, and 
his assistant, Mr. William McManus, accompanied Mr. William 
Owyer voting representative of the Regional Community College 
Board to the DSB meeting. Utilizing agreed-upon criteria, 
applications from seventy-one (71) firms were considered. 
Tentative finalists were scheduled for interviewing with a 
specific interest to be directed to how said firms intended to 
staff their Boston office and furnish the Commonwealth with the 
time of the principals experience with projects of this 
nature. 4 

Some time after June 12, 1968, the DSB notified the four firms selected 

to be interviewed. From the information currently available, it appears 

that, unless Manzi had advance notice of the firms which the DSB was going to 

choose for interviews, the meeting between Manzi and Masiello took place 



shortly after June 12, 1968. 



41 



THE ACQUISITION OF THE CONTRACT 



Stanley Smith came to Boston a day or two before the scheduled interview 
with the DSB. He had two purposes for arriving early: to rehearse DMJM's 
presentation to the DSB, and to meet with Toots Manzi and finalize the 
$22,000 deal for the contract to design a new campus for Holyoke Community 
College. 



- 18 - 

Stanley Smith ana William Heinkel were to represent DMJM before the OSE 
en June 26, 1968. The two men, along with Frank Masiello, rehearsea their 
presentation several times beforehand. The first run-through took over an 
hour, but they were able to modify the presentation to make it fit into the 
allotted half-hour. 

SMITH MEETS MANZI ANO MAKES THE DEAL 

Masiello introduced Smith to Manzi at a meeting in Boston in the early 
evening, "just after normal business hours." Just the three of them were 
present. Masiello remembers the meeting vividly because Smith mispronounced 
Manzi's nickname, as if it rhymed with "Boots." Masiello got the meeting 
startea by describing the role that both DMJM and Manzi would play on the 
Holyoke project. He said that OMJM had agreed to pay Manzi not more than 
$22,Q0C in cash over a period of time — with the payments beginning when OMJM 
received its first fees on the project from the Commonwealth, and continuing 
thereafter in proportion to the fees received by OMJM. 

On his part, Manzi would see to it that OMJM was selected as the designer 
for the project as long as OMJM made the list of three firms nominated by the 
OSB; but Manzi made it clear that it was DMJM's responsibility to make a good 
presentation to the Board. He said he could not ensure DMJM's selection as a 



- 19 - 

finalist by the DSB. In addition, Manzi would see to it that any necessary 
funding for construction or further design work at Holyoke Community College 
would be included in the Governor's proposed capital outlay budget. However, 
Manzi said he could not control what happened to the capital outlay budget in 
the legislature. 

Smith said that DMJM would reduce the amount it was to pay Manzi if the 
fees paid to DMJM on the project were less than anticipated. Manzi said 
that, if the project expanded and DMJM received more fees, then it would only 
be fair for it to pay additional money as campaign contributions. Smith was 
noncommittal, according to Masiello. Manzi's suggestions "didn't seem to sit 
too well, but he didn't say yes and he didn't say no. The possibility was 
left open." 

Manzi was not happy that the payments were not going to begin until DMJM 
began receiving fees on the project, or that the payments were going to be 
spread out over time. Smith flatly stated that DMJM would not pay any money 
up front — no matter how small the amount. 

Smith asked if it would be possible to make the payments to Manzi by 
check, to make them legal contributions. Manzi said that it was impossible 
because they needed cash for upcoming campaign activities. 

MANZI RECOMMENOS MBM 

Manzi asked Smith which firms OMJM was planning to hire as consultants if 
they received the contract. Smith mentioned Masiello 4 Healy as its local 
architectural consultant. He mentioned other firms as possible consultants 
for cost control, landscape architecture, etc. Manzi asked Smith if he was 
familiar with a cost estimating firm called McKee-Berger-Mansueto (MEM). 
Smith said that OMJM had worked with MBM on many projects. In fact, DMJM was 
one of MEM's larger clients. He told Manzi that DMJM was considering using 
MEM on the Holyoke project even before Manzi suggested the firm. 

Why did Manzi suggest MEM to DMJM as a consultant for the Holyoke 
project? According to Masiello's testimony, Manzi knew MEM Vice President 
Anthony E. Mansueto. Manzi had first been introduced to Mansueto by Masiello 
on the seventh day of the 1967 world Series between the Boston Red Sox and 
the St. Louis Cardinals. At the end of their conversation, Mansueto had 
given Manzi one of his business cards and asked him if it would be all right 
for him to come to Manzi's office to discuss possible work for MEM with the 
Massachusetts Turnpike Authority. Manzi said he would be happy to talk to 
him. 



- 20 - 

Some time after the initial meeting between vansueto and vanzi, but prior 
to the meeting between Manzi and Smith, Manzi called Frank Masiello to ask 
his opinion of vansueto. Masiello said he thought Mansuetc *as an "OK guy." 
Manzi asked if Mansueto would be willing to make a contribution, and if he 
would live up to a commitment if one were made. Masiello replied that he 
thought he would. He recalled that he and Mansueto had each purchased two 
tickets to a $500 per plate dinner early in the Peabody administration, so he 
"wasn't unfamiliar with making political contributions . " AA 

THE OSB INTERVIEW 

» 

Stanley Smith anc William Heinkel of OMJM made the first presentation to 
the DSB in Room 2108 of the Saltonstall State Office Building on June 26, 
1965. OMJM was scheduled to appear first among the four firms before the 
Board — from 1:15 to 1:45 PM. Present were the five appointed Board 
members: Chairman Earle Littleton, Robert Meserve, Stanley Porter, William 
Pulsifer and Leo Whelan, as well as BBC Director Horace Chase and BRCC 
President William Owyer. At least Chase and Dwyer were already familiar with 
OMJM, thanks to the firm's legwork in Massachusetts. Fred Kussman, the 
Executive Secretary of the OSB, took the minutes. 5 

Frank Masiello was at the DSB meeting as an observer. He described the 
interview: Smith identified the participants of the design team and 
describee each one's role in the project. Smith told the Board that Masiello 
& Healy would take part in programming and planning and in preparation of 
construction documents, and would do the majority of the construction 
supervision. He told them that DMJM planned to hire MEM as its cost 
consultant on the project. He then gave the Board a timetable for the 
pro ject--f rom programming ana master planning through construction 
supervision. Finally, he made a slide presentation showing other DMJM 
projects. Approximately five to ten of the allotted thirty minutes were 
still remaining when Smith finished his presentation, and the DSB members 
asked Smith a variety of ouestions about how DMJM would handle the project. 
The role of local firms and the availability of OMJM personnel on the project 
were major ouestions. 4 

Following interviews with the three other firms, the DSB voted to 
nominate three finalists for the Holyoke Community College project: Alderman 
and MacNeish; Daniel, Mann, Johnson, Mendenhall; and Deeter, Ritchey and 
Sippel. 47 The DSB notified Commissioner DeFalco of its choices in a letter 
signed by Chairman Earle F. Littleton and dated June 28, 1S68. 48 



- 21 - 
Shortly after 5:CC p.m. on the day of the interview, Frank Vasiello 
called the EEC and spoke to either George Rushton or Fred Kussman. Rushton 
was an assistant to Director Chase. Vasiello found out that CMJM had been 
nominated as a finalist for the Holyoke project by the OSE. 

THE COMMISSIONER'S SELECTION 



Cn July 9, 1968, Commissioner DeFalco notified EEC Director Horace Chase 
that he had selected Daniel, Mann, Johnson, Mendenhall to design the Holyoke 
Community College project. He made his choice of DMJM official by writing 
"CK APD" next to the name of the firm on the letter he received from Earle 
Littleton listing the three finalists for the project. " u 

CeFalco testified before the Commission about his procedures for awarding 

design contracts, including the Holyoke project in particular. The following 

excerpts have been selected from the transcript to represent and summarize 

his testimony on Holyoke: 

Q. How did you go about selecting the design firms to whom 
contracts were awaraed during your term as Commissioner? 

A. I would randomly select a firm from the listing of three that 
were presented to me. 



Q. 
A. 

Q. 



A. 
Q. 



Q. 

A. 

Q. 

A. 
Q. 

A. 

Q. 



And what do you mean by saying you would randomly select a firm? 

without having any system of keeping track of my selections, I 
would not pick the same position [on the list] each time. 51 

Except that you may not remember the firm concerning which you 
were contacted, I am asking you whether at any time during the 
time you were Commissioner, if someone from the Governor's 
office contacted you with respect to the award of any design 
contract? 

It is certainly possible, but I don't recall any. 52 

Sir, did Albert "Toots" Manzi ever communicate with you 
concerning the award of a design contract to any design firm? 

Not that I can recall. I had little or no contact with Toots 
Manzi while I was Administration Commissioner .*3 

You indicated in an earlier response that on occasion you might 
see a name on the list sent to you by the DS8 with which you 
were familiar? 

Yes. 

And if that happened, that might affect your selection in that 
particular case? 

Yes. 54 

Is it your answer, sir, that you selected [Daniel, Mann, 
Johnson, Mendenhall] through a random selection process? 

Yes, it is. 

Sir, did anyone communicate with you concerning the award of 
this particular contract? 



A. My best recollection is no. 55 



- 22 - 

Former Commissioner DeFalco's testimony raises several auesticns: (1) OeFslco 
admitted that previous knowledge of a design firm nominated by the Designer 
Selection Board might influence his selection of a designer for a project. As 
was mentioned above, CeFalco testified, in 1980, that he did not recall a meeting 
between himself, Stanley Smith, Frank Masiello, and Bruce Dunsmore in 1968. Yet 
Frank Masiello recalls DeFalco mentioning the meeting to him during a plane trip 
some years later. 56 Did the meeting with the OMJM representatives plant the 
firm's name in DeFalco's memory long enough to influence his selection of the 
firm for the project? (2) Oid Toots Manzi influence DeFalco's selection of DMJM, 
and, if so, how did he do it? The Commission has no evidence of any direct or 
indirect communication between DeFalco and Manzi regarding the Holyoke Community 
College project, although the rest of the evidence surrounding the award of the 
contract certainly suggests that such a communication occurred. 

Horace Chase of the BBC and Arthur Mann of DMJM executed a contract for the 
design of the Holyoke Community College project, dated July 9, 1968 — the same day 
that Commissioner DeFalco awarded the contract to DMJM.' 7 It is not usual — 
indeed it is highly unusual — for a contract to be executed on the same day it is 
awarded. After the BEC is informed by the A4F Commissioner of his choice of a 
firm to design a project, it must notify the designer (usually by mail) of the 
award of the contract, and arrange for execution of the contract. That process 
takes more than one day to complete. Anthony DeFalco could not explain why 
DMJM's contract was executed on July 9, 1968. He said "Anything done in one day 
by the Commonwealth would surprise me." 

Frank Masiello testified that he received a telephone call from Toots Manzi 
informing him that DMJM was about to be selected for the Holyoke Community 
College project. The phone call from Manzi was the first notification received 
by Masiello that DMJM was going to win the contract. Masiello then called 
Stanley Smith and told him the good news. Smith was elated. 9 

According to Masiello, Stanley Smith and Harry Clausen came to Boston on July 
9, 1968. They must have received advance notification of the award of the 
contract to DMJM in order to travel to Boston and still be able to pick up the 
contract on the very day it was awarded. That theory is supported by the fact 
that the BBC's official letter of notification to DMJM is undated, perhaps to 
conceal the fact that DMJM had already executed its contract with the 
Commonwealth of Massachusetts prior to official notification that it had been 
awarded the project. 

That evening, Smith and Clausen bought cocktails and dinner at Locke-Ober's 
for Frank Masiello and several BBC plan examiners to celebrate the award of the 
contract. The BBC personnel were James Cusack , Walter Flaherty, and Joseph 



Glynn. 61 

Frank Masiello does not recall Arthur Mann being present in Eoston on July 9 
to execute the contract. It is likely that Horace Chase executed the Contract on 
behalf of the BBC on that date, and that Smith took the contract back to Los 
Angeles, where Arthur Mann later executed it on behalf of DMJM. 

Also on July 9, 1968 (according to a document found in the files of MEM), 
Frank Masiello spoke on the telephone to MEM Vice President Seymour Eerger, who 
passed the message along to Anthony Mansueto. Masiello informed Eerger that DMJM 
haa approved M8M as its cost consultant on "their $9 million Massachusetts 
project if they get it." 63 

About two weeks later, Masiello spoke by telephone with Mansueto. Mansueto 
described their conversation in an internal memorandum to MEM employee Ivan 
Soskel , which read in part: "DMJM has been requested through our Massachusetts 
political friends to use MEM on their new Holyoake [sic] College project."^ 4 

Masiello testified that when he spoke to Mansueto he was referring to the 
meeting between Stanley Smith and Toots Manzi at which OMJM was asked to hire MEM 
on the Holyoke project. In his memo to Soskel, Mansueto continued: "I get 
the general impression from Frank Masiello that we are being pushed by the state 
people and that some of the work that we have got is not as coincidental as it 
might seem — people are being asked to use MBM." Masiello said he made that 
remark sarcastically after Mansueto boasted about how well MBM was doing in 
Massachusetts. He told Mansueto not only that Manzi had pushed for MBM on the 
Holyoke project, but also that BBC officials were recommenaing MBM to architects 
as a cost control consultant. 67 

However, DMJM did not submit MEM's name to the EEC for approval until June, 
1969, and did not submit Masiello's name until February, 1970. In a Commission 
interview, Masiello said that he thought DMJM felt it did not need him anymore 
once it won the contract, and that DMJM was constantly trying to reduce his 
firm's role in the project. 68 

THE PROJECT EEGINS 

DMJM began to prepare the master plan for the new Holyoke Community College 
campus shortly after it received the contract, and worked on the plan for nearly 
a year. The completed master plan was submitted to the BBC on June 13, 1969 and 
approved by the Bureau on August 7, 1969. Besides the development of the master 
plan, many other significant events occurred during that first year of the 
project. 



- 24 - 

Frank Masiello moved to Florida in late August or early Septemcer, 1968, 
although he leasea an apartment in Worcester and continued to spend a 
consiaerable amount of time in Massachusetts for the next four years. Frank's 
brother, William V. Masiello, began to take a more active role in the management 
of the firm. At about the same, Edward Healy left the firm to go into business 
with his father. The name of the firm was then changed from Masiello 4 Healy to 
Masiello 4 Associates. 

In 1569, Frank Masiello sold his firm to Kassuba Development Corp. of 
Florida. He continued as President of the firm under Kassuba while Masiello 4 
Associates served as an in-house architect for its parent company. Frank 
Masiello would purchase Masiello & Associates back from Kassuba in early 1972, 
then sell it to his brother William in late 1972. 



Manzi's Weekly Calls to Masiello 

Accoraing to Frank Masiello, one of the major factors in his decision to 
leave Massachusetts was pressure from Toots Manzi to raise funds and to keep his 
"political contribution" commitments to Manzi. Masiello testified that, from 
1965 on, Manzi called him at home every Sunday morning between 10:30 and 11:30. 
Manzi usually called again on Monday evening or Tuesday if Masiello didn't report 
back to him on the results of his fundraising efforts. Masiello described 
Manzi's manner during those frequent calls: "I remember him as always being calm 
and businesslike, but extremely persistent ... and when he thought you might not 
be putting your best efforts forward, he would increase the pressure even more." 
The calls put a great strain on Masiello, and led to personal and marital 
problems. One of the purposes of his move to Florida was to escape Manzi's phone 
calls, but it did not work. Manzi found out the unlisted telephone number of 
Masiello's apartment in Worcester and called him there when he was in town. 
Manzi also called William Masiello when Frank was out of town, and asked him to 
relay messages to Frank. ° 

within five or six weeks after OMJM received the Holyoke contract, but before 
Masiello moved to Florida, Manzi began to mention OMJM in his weekly phone 
calls. He told Masiello that he was under a lot of pressure from the Governor's 
office to raise funds, and asked if it might be possible for DMJM to start making 
payments en its commitment — even though OMJM had not yet received any fees from 
the Commonwealth. He was not pleased when Masiello reminded him that the 
agreement had been for OMJM to begin making payments only after it began 
receiving fees. Masiello said, "I don't think he ever heard that part of the 



conversation when we were negotiating the contributions with him and Smith 



„71 



- 25 - 

As often as he could after Manzi called, Masiello would call Stanley Smith in 
Los Angeles and tell him about the pressure Manzi was putting on him. Smith 
refusea to consider making any payments until DMJM received some fees from the 
Commonwealth, insisting that Manzi knew what the arrangement was at the outset. 

On a few occasions, when the pressure frcm Manzi was particularly heavy, 
Masiello asked Smith to call Manzi directly and explain DMJM's position. 
Masiello believes that Smith did call Manzi because the pressure from Manzi eased 
for a while at the time the calls would ordinarily have been made. 

In November, 1968, both Frank Masiello and Anthony Mansueto attended a 
convention of the Society of American Registered Architects in Los Angeles. It 
was held at the Ambassador Hotel, just across the street from DMJM's offices. 
Mansueto spoke at the convention on how to detect fraud and corruption in public 
contracts through cost control, and Stanley Smith spoke on how to acquire 
government contracts. 

While he was in Los Angeles, Masiello spoke to Stanley Smith and Tevfik Kutay 
about Masiello 4 Associates' role in the Holyoke project. He was unhappy that he 
didn't have a contract with DMJM defining that role, and felt he was getting the 
"runaround" from DMJM. Smith and Kutay assured him that he would receive a draft 
contract within a few days. But Masiello already knew he would be unhappy with 
the terms of the contract. It became clear at the meeting that Stanley Smith had 
a much more limited conception of Masiello 4 Associates' role in the project than 
Frank Masiello did. Smith said that Masiello 4 Associates would have major 
responsibility for supervision of the construction contract, but would not be 
involved in programming and master planning, or in preparation of the plans and 
specifications. No agreement was actually signed until May, 1969. 

Masiello also told Smith and Kutay that "Manzi's constant telephone barrages, 
week after week, were a problem." They reiterated that DMJM would not begin 
making payments to Manzi until it received its first fees on the project. 
However, they did say that they expected to begin receiving fees shortly, and 
could then make a payment on the $22,000 commitment. 73 

Anthony Mansueto also met with DMJM officials during the convention 
(according to entries in his diary), presumably to define MEM's role in the 
Holyoke Community College project. He met with Harry Clausen on October 31, 
1968, ana perhaps November 13, 1968, and with Bruce Dunsmore on November 14, 1968 

After the convention ended, Masiello informed Manzi that DMJM was still not 
willing to make a payment to him. So the phone calls from Manzi to Frank and 
William Masiello continued. Frank Masiello testified, "If he couldn't reach me, 
he would then bother my brother, Billy, and then Bill would get on the phone and 
locate me wherever I happened to be ... and lay on me the good words that Manzi 



laid on him." When Frank was in Worcester, Manzi would call him at the apartment 
he maintained there, Manzi also called him at the Saltonstall State Office 
Building in Boston while he was attending a meeting of the Massachusetts Board of 
Registration in Architecture there. The pressure from Manzi bothered him so much 
that he sometimes stayec in a hotel in Boston rather than go to his apartment in 
Worcester where he would receive a phone call from Manzi. 

Cne new theme developed in Manzi's telephone calls after the convention: he 
sometimes told Masiello that he was going to hold him responsible for every 
dollar of the commitment, which both DMJM and MEM had made to him, because 
Masiello had brought both DMJM and VBM into the state and was instrumental in 
bringing them together with Manzi. Masiello declared that he refused to be held 
responsible for someone else's actions. (The discussicn of political 
contributions by MEM to Manzi in connection with its contract for construction 
management at the Boston campus of the University of Massachusetts is presented 
elsewhere in this report in the chapters en MEM.) 

DMJM'S FIRST PAYMENT TO MANZI 

Manzi Monitors for Payments to DMJM 

In April, 1969, Manzi called Frank Masiello and said that DMJM had just 
received a check from the Commonwealth. He was ouite upset that DMJM had not 
made arrangements to make a payment to him. Masiello said: "He made it very 
clear to me that there were a lot of things he could do to prohibit the contract 
or the payments from moving forward in a normal, orderly process" if OMJM did not 
satisfy him. Manzi also stated he would not make any efforts to place funds for 
Holyoke Community College into the capital outlay budget if DMJM did not 
contribute. Masiello told Manzi that he would call Smith and find out what was 
happening, then call him back. 75 

OMJM submitted its first invoice to the Commonwealth for its work on the 
Holyoke project on April 10, 1969. The invoice was in the amount of 
$8, 976. 15. 76 Since it normally takes the Commonwealth two or three weeks to 
process an invoice, DMJM probably received its first payment on the project 
around the end of April, 1969. 

How did Albert Manzi find out about the payment to DMJM? Information on 
payments on public contracts is available to the public through the office of the 
State Comptroller. M. Joseph Stacey, who served as comptroller from 1966 through 
February, 1973, testified that Manzi himself reauested information ten times on 
payments to MEM pursuant to its contract to manage the construction of the new 
UMass/Eoston campus. Stacey does not recall Manzi reauesting such information on 



- 27 - 

ether projects, but Manzi could have reauested information on the Holyoke 
project from employees of the comptroller or from the BBC. 

Manzi's call to Masiello was not without precedent. Masiello testified that 
Manzi would sometimes, "call me up and tell me he knew I had a payment in the B6C 
and that we were cue to be paid." In seme cases, Manzi even carried checks for 
M asiello 4 Associates from the comptroller's office in Boston to Worcester. When 

Frank or William Masiello came to pick up the check from him, Manzi took 

•70 
advantage of the opportunity to remind them of their commitments to him. 

As a result of his conversation with Manzi, Frank Masiello called Stanley 
Smith to ask him if it was true that DMJM had received a payment on the Holyoke 
project and not maae a payment to Manzi. Smith replied that DMJM had invoiced 
the Commonwealth for a small amount, but had not yet even received the check. He 
was surprised that Manzi had found out about the payment so soon. 

Masiello suggested to Smith that DMJM make a payment to Manzi to prevent him 
from causing the job to be delayed or payments to be held up. Masiello was also 
concerned about the continuing pressure from Manzi, so he told Smith, "I think 
you are just going to have to make up your mind that this man just isn't going to 
get off my back or your back. He is going to be insisting until he starts seeing 
some payments on the commitment." Smith was unconvinced and remained noncommital 
about making a payment to Manzi. 

Masiello later called Smith again, but Smith was not there so he spoke to 
Tevfik Kutay instead. He told Kutay what Manzi had said about causing delays in 
the project or in payments to DMJM and not pushing for further funding for the 
project if DMJM would not contribute. Kutay said that Smith had told him about 
Masiello's previous phone call, so he was aware of the pressure Masiello was 

under. He promised that OMJM would make its first payment to Manzi in the very 

79 
near future. 7 

DMJM's $5,000 Check 

Masiello expected DMJM to make a cash payment directly to Manzi. Instead, in 
late April, 1969, Masiello received an "unpleasant surprise" in the mailbox of 
his Florida apartment: a corporate check from DMJM in the amount of $5,000, 
payable to him. The DMJM letterhead envelope contained no letter of explanation, 
only the check wrapped in a piece of paper. 

Masiello, however, needed no letter of explanation. He testified, "I knew 
exactly what they were attempting to do. They were attempting to make me, cr our 
firm, a conduit." He called Kutay to tell him that Masiello was not going to be 
a conduit for payments to Manzi. He insisted that payments be made in cash to 
Manzi by representatives of DMJM. Kutay replied, "There isn't any way we can get 



- 28 - 

that amount of cash, and you have been so persistent in trying to get a payment 
out of us for Manzi, and he's been harassing you, please do' it just this once. I 
just don't see any way of getting the money to Massachusetts to relieve the 
pressure that you're under." Masiello relented and agreed to make the payment to 



Manzi that time — but never again 



80 



How the Check was Cashed 

Frank Masiello arranged to have his brother, William, cash the check and 
deliver the proceeds to Manzi. 81 William Masiello testified that "Frank called 
me into his office and asked me to cash a, check from DMJM." 8 '' Thus, it appears 
that the $5,0C0 check was handed from Frank to William Masiello during one of 
Frank's frequent trips to Massachusetts. 

Both Frank and William Masiello remember Frank endorsing the check on the 
back, placing it inside a plain envelope, and writing "Toots" on the outside of 
the envelope. Frank handed the envelope to William and asked him to cash the 
check and deliver the $5, COO cash to Manzi. When William asked Frank where he 
should cash the check, Frank said he would call Sherwood "Woody" Tarlow, 
President of the Capitol Bank and Trust Company in Boston, and ask him to cash 
the check. He chose Tarlow's Bank for two reasons: (1) He knew Tarlow from 
Tarlow's days as a fundraiser for former Governor Endicott Peabody. Masiello 
believed that Tarlow would understand when he said he needed to cash the check to 
make a political contribution, and he wouldn't have to explain his actions 
further. (2) Tarlow's Bank was located at 679 Beacon Street, near the Prudential 
Center where the Massachusetts Turnpike Authority had its offices. Manzi was a 
member of the Turnpike Authority, and spent a couple of days a week at its 
offices in Boston. The $5,000 payment could be delivered to him there. 

Frank Masiello called Tarlow and asked permission for William to cash a 
$5,000 check at his bank. Tarlow asked what the check was for and Masiello 
replied, "a political contribution." Tarlow told Frank to have William come into 
the bank with the check. Tarlow instructed him to have William see one of the 

g c 

bank officers if Tarlow was not there when he arrived. J 

According to William Masiello, Frank Masiello told him that he had talked to 
Tarlow and arranged for William to cash the check at the Capitol Bank and Trust 
Company. William Masiello took the check to the bank, where Tarlow authorized it 
by signing his name on the back. Masiello took the check to a teller named Fred 
Young, whom Masiello knew from the Worcester area. Masiello gave Young the check 
and received $5,000 cash in return. When he put the cash back into the envelope 
from which he had taken the check, Masiello recalls that Young noticed the word 
"Toots" on the envelope and said, "Some young lady is going to be very lucky." 



29 



Masiello left with the cash. e6 



Sherwood Tarlow appearea before the Special Commission and was asked about 

the call from Frank Masiello and the cashing of the $3,000 check at his Eank. He 

testified as follows: 

"I am sure it occurred because, if Frank Masiello had called me 
at that time, I would have been more than pleased to have cashed 
such a check. He had an ongoing relationship, up to '69 or '70, 
with our bank in a small way, by way of being a borrower, etc., 
so, even though I don't recall the exact circumstances, I know I 
would have, at the time, cashed such a check*. 

Q. It would have been logical for him to have said( the check was for) 

a political contribution? 
A. Absolutely. 

Q. You would have cashed the check? 
A. Surely. 87 



The Delivery to Manzi: "Is That All?" 

William Masiello testified that he took the $5,000 from the bank to the 
Prudential Center. He said he must have arranged in advance to meet Manzi in the 
Turnpike Authority's office, but cannot recall doing so. Manzi was alone in his 
office when Masiello arrived. He handed Manzi the envelope containing the cash, 
but Manzi did not open it. It was a brief meeting; the only conversation between 
the two men concerned the beautiful view of the Charles River from Manzi's office 

89 

high up in the Prudential Tower. 

Frank Masiello testified that William Masiello later told him that Tarlow was 
not there when he took the check to the bank. He also testified that William 
later told him that Manzi looked at the money in the envelope and said, "Is that 
all? When are they going to make the next payment?" 

William Masiello later told his brother that he thought the check from DMJM 
would come back to haunt him. * Both Masiellos have commented to Commission 
staff that this remark turned out to be prophetic. 

On May 22, 1969, Frank Masiello executed a preliminary agreement with DMJM 
defining Masiello 4 Associates' role in the Holyoke project. The agreement did 
not say much more than Stanley Smith had said the previous November: Masiello A 
Associates' services would fall into three areas: architectural construction 
supervision; some of the construction supervision in the areas designed by 
structural, mechanical, or electrical engineers; and general consulting services, 
including liaison with the client and the 8EC. The firm would be paid a lump-sum 
fee, to be negotiated later, for architectural construction supervision, and 

92 
2-1/2 times the hourly rate of employees for their services on the project. 

About two weeks later, Ivan Soskel of M6M executed a contract with DMJM for 

cost estimating services on the Holyoke project. The DMJM/MBM contract was much 

more detailed and comprehensive than the OMJM/Masiello agreement. After the 



- 30 - 
execution of the contract, DMJM reouested the SEC to approve mem as a consultant 
on the Holyoke project. Horace Chase, Director of the BBC, approved the hiring 
of MEM on July 29, 1969. 53 

PREPARATION OF PLANS ANO SPECIFICATIONS 



The BBC approved the master plan which OMJM prepared for Holyoke Community 
College on August 7, 1969. Armed with data on expected enrollments, program 
objectives, space needs, etc., the firm soon began the long process of developing 
plans and specifications. Harry Clausen came to Massachusetts several times for 
meetings with officials at Holyoke Community College or the SEC, but the actual 
oesign work was performed in Los Angeles. 

A letter from Clausen to HCC President George Frost, dated December 3, 1969, 
contained one curious passage: "Could you set up a meeting for me with someone 
in Can O'Connell's organization en Wednesday morning, say at 10:30 a.m., to talk 
about local bidding and construction practices." Caniel O'Connell's Sons, 
Inc., was the general contractor on two of the construction projects at Holycke 
Community College, and was paid in excess of $17 million by the Commonwealth on 
the two projects. However, the first of those contracts was not awarded until 
January, 1972, more than two years after the scheduled meeting with Clausen. 5 

The letter raises two questions: (1) Why did Clausen want to meet with a 
representative of O'Connell? Was it just a coincidence that the same firm later 
won two construction contracts at Holyoke? (2) Why didn't Clausen just speak to 
a representative of Masiello A Associates to obtain the same information? After 
all, helping DMJM to overcome the disadvantage of being an out-of-state firm was 
Masiello's role in the project as it was originally conceived; explaining the 
peculiarities of local laws and methods certainly falls under that heading. The 
proposed meeting between Clausen and O'Connell indicates that Frank Masiello was 
correct in believing that DMJM was trying to reduce the role of his firm in the 
Holyoke project. 

At this time, Frank Masiello was speaking to DMJM about two problems: (1) 
the lack of a specific contract between Masiello 4 Associates and DMJM for the 
Holyoke project; and (2) the renewed pressure from Manzi for another payment on 
the $22,000 commitment. Masiello said that Msnzi just "couldn't ... understand 
why DMJM was reluctant to come forward and make these payments as ouickly as 
possible. " 96 



- 31 - 

The Masiello-CMJM Contract Dispute 

On February 27, 1970, Harry Clausen requested the EEC to approve the hiring 
of Masiello 4 Associates as a consultant "to furnish local architectural liaison 

services," even though no more specific agreement had been reached en Masiello's 

07 
role in the project. The reauest was approved by the EEC on March 25, 1970. 

Cespite much correspondence and face-to-face negotiation with OMJM, no 

agreement satisfactory to Masiello 4 Associates was reached during 1970. Frank 

Masiello received a proposed letter of agreement from Arthur Mann, Executive Vice 

President of OMJM, dated April 10, 1970. He signed the agreement on April 15, 

1970, but did not return it to OMJM. 98 Masiello testified, "I came across the 

letter, just quickly looked at it, and then I signed it. [But], for some reason 

or another, a flag went up in my brain and I decided to read it once again after 

I signed it.... I realized this still wasn't defining what our role would be." 

According to Masiello, his major objections to the proposal were: (1) the lack of 

a clear definition of his firm's role in the project or of its compensation; and 

(2) a clause which appeared to make Masiello 4 Associates liable for errors made 

by OMJM on the project. He called Smith and told him he was not going to return 

99 

the agreement. Masiello asked to meet with Smith to discuss the contract. 

Masiello tried to meet with Smith during May, 1970, but was unable to do so. 
A letter from Smith to Masiello, dated May 28, I960, reads, "I am sorry I was not 
able to see you at the time of your visit here." The rest of the letter 
indicates that the two firms were still far from agreeing on the terms of a 
contract. Smith reminded Masiello that the project was not a Joint venture; 
Masiello 4 Associates was^ only a consultant to OMJM. He reassured Masiello that 
the liability clause of the contract made Masiello 4 Associates responsible only 
for errors made by its own personnel, but he did not define M 4 A's role in the 
project much more closely than it had been earlier. He said he hoped that 
Masiello 4 Associates would perform 50-75% of the construction supervision at 
Holyoke for a fee of $50,000 to $100,000, but emphasized that the figure was only 
an estimate, not a guarantee.* 00 Frank Masiello was disappcinted with the 
offer: he had expected his firm to do all the construction supervision on the 
project, and perform other services as well. 

Masiello and Smith met at the Palm Beach (Florida) International Airport in 
early June, 1970. Smith called Masiello at his office and said he had a little 
time before his flight left. He asked Masiello to come to the airport and 
discuss their contract for the Holyoke project. 

Masiello told Smith he was not satisfied wth DMJM's contract effer because he 
felt it was too vague. They discussed the matter, but could not reach any 
agreement. They also failed to reach agreement on another project. Masiello 



- 32 - 

testified that he had been pursuing a project in Maryland in which he had invited 
DMJM to participate. When he subseauently learned that DMJM had been awarded the 
contract — with no mention of Masiello 4 Associates' involvement — Masiello was 
irate. He wanted some role in the project or compensation from CMJM, but Smith 
would give him no assurances. 

CMJM's Differences with Manzi 

Smith told Masiello that he had learned (from Joseph Glynn of the EEC, 
John Costello of the ERCC, and George Frost of Holyoke Community College) that 
the Governor's capital outlay budget included only $2,778,000 for site 
preparation work at Holyoke Community College. Now that DMJM was well into the 
design of the new campus, Smith was concerned that the legislature might not 
appropriate construction funds for the whole project. He wondered why Manzi was 
not fulfilling his part of the commitment, to make sure that construction funds 
were included in the Governor's budget. 

Masiello told Smith that Manzi had told him he had not pushed for funding for 
the project because DMJM wasn't making payments rapidly enough. Masiello 
suggested that another payment to Manzi might convince Manzi to work harder on 
behalf of DMJM. Masiello also hoped that another payment would relieve the 
pressure on William Masiello, who was now taking the brunt of Manzi's phone 
calls. (According to 8EC records, DMJM had received only about $30,000 in fees 
to that point. The $5,000 paid to Manzi in 1969 had taken 17% of the fees paid.) 

Smith asked if Frank Masiello would monitor the progress of the capital 
outlay bucget for him. He wanted to know what was happening so DMJM could use 
its "friends in Masachusetts" to try to get additional funds fdr the Holyoke 
project inserted into the capital outlay budget. Masiello said he was kept in 
Florida by his business. He suggested that Smith contact William Masiello. 

Masiello suggested a meeting with other officials from DMJM to try to resolve 
their contract difficulties once and fdr all, and to arrange another payment to 
Manzi. Smith agreed to set up a meeting. 

As a result of this meeting with Frank Masiello, Smith wrote a letter to 

William v. Masiello on June 11, 1970. He told Masiello that he had planned to 

call on him in Boston, but was called back to Los Angeles unexpectedly. The body 

of the letter reao: 

I did want to discuss with you some of the aspects of the legislative action 
on Holyoke, since most of the information that I have had is a reflection of 
what I have heard from your brother Frank, what we have heard from Joe Glynn 
of EEC and also from Jchn Costello and also from George Frost of Holyoke. 
The consensus is that $2,700,000 is presently in the Governor's budget for 
Holyoke, and I understand that the budget totals $239,000,000. Costello 
believes that $75,000,000 of those funds are "weak" in that they will 
probably come off the final budget due to improper timing, etc., and the 
$22,00C,C00 for the funding of the first increment of Holyoke will end up in 



- 33 - 

the final appropriation. 

I fina this hard to believe, inasmuch as I do not believe that Dr. Dwyer, 
head of the Community College system has this project established as his 
first priority. It may be that he believes that George Frost's contacts with 
both the President of the Senate and the Speaker of the House is sufficiently 
strong that he can lobby this through on his own. I doubt it. 

The consensus here is that the appropriation will probably be a compromise, 
and that say approximately half of the project will be funded for the first 
increment . 

I would appreciate you either dropping a line or giving me a phone call as 
you develop any more information that would be of interest to us here 
regarding the project. 102 

Stanley Smith's letter indicates that he was well informed on the progress of 

the legislation in Massachusetts, but that he needed someone outside of state 

government, like William Masiello, to provide him unbiased information on the 

capital outlay budget. Smith was undoubtedly aware of Masiello's political 

connections. Masiello's access to inside information would be another reason for 

Smith to seek Masiello's opinions and advice. 



The Masiello-CMJM Meeting in Washington in June, 1970 

In late May or early June, 1970, the meeting which Frank Masiello had 
requested took place at DMJM's office in Washington, D.C. Present at the meeting 
were Frank Masiello, Stanley Smith, Tevfik Kutay, William Heinkel of DMJM's 
Washington office, and Barry Mountain of OMJM. Although Frank Masiello had met 
Mountain before, he had never had any business dealings with him. Mountain was 
introduced as the manager of international projects and liaison officer on 
government contracts for DMJM. 

Stanley Smith began the meeting by setting out the agenda — discussion of 
(1) the Maryland project, (2) a contract for Masiello & Associates on the Holyoke 
project, and (3) a second payment to Manzi. 

The manager of CMJM's Washington office, William Heinkel, admitted that he 
had not been fair to Masiello 4 Associates in the pursuit of the Maryland 
project. Masiello testified, "His apology didn't do a whole lot of good because 
they were already well into the project." 

The topic switched to Holyoke before the Maryland Question was resolved, and 
Heinkel was excused from the meeting. Masiello said, "He [Heinkel] ... was not 
aware of DMJM's involvement in contributions in Massachusetts. I believe they 
were attempting to keep this from him." Frank Masiello told the CMJM officials 
that he ana his brother were still under a lot of pressure from Manzi to get DMJM 
to make another payment to him. He also told them that "Manzi was starting to 
make noises about wanting to get ... a larger sum of money paid in the guise of 
political contributions." Masiello expressed his hope that OMJM would soon make 
a second payment to Manzi, but without using Masiello & Associates as a conduit 



- 34 - 

for the payment. Finally, Masiello stated that he wanted to resolve the conflict 
over his firm's role in the project. 

According to Masiello, there was a lot of heated discussion between himself 
and Smith. Kutay made occasional comments, while Mountain sat and listened. 
After a while, Mountain said, "Look, this isn't getting us anyplace. Let's get 
this matter resolved once anc for all.... Let's come to an amicable solution 
that is agreeable to Frank." The men decided that Masiello 4 Associates would be 
paid a $9,000 consulting fee en the Maryland project. Masiello & Associates 
would receive about $100,000 for doing all the construction supervision at 
holyoke Community College. It would also be compensated for the work that it had 
already performed en the project, and would become involved in other areas on a 
per diem basis . 

The group then discussed the payments to Manzi. Mountain said that he was 
taking over for Kutay as the official in charge of the Holyoke project. He said 
he would see to it that payments to Manzi would be made more quickly. Masiello 
saia that he wanted to stop acting as a go-between in the Manzi/DMJM conflict. 
He suggested a face-to-face meeting between Mountain and Manzi. Mountain agreec, 
and the meeting was tentatively scheduled for July, when Masiello would be in 

103 

Boston anyway — for a meeting at the BBC on the Holyoke project. 



The Sonesta Hotel Meeting in July, 1970 

On July 8, 1970, the evening before the meeting at the BBC on the preliminary 
cost estimates for the Holyoke project, Mountain, Smith, Manzi and Masiello met 
at the Sonesta Hotel at Logan Airport. Manzi was displeased that OMJM had made 
only one $5,000 payment to him in the two years since the contract was awarded. 
He told Smith and Mountain that the approval of plans or invoices could be 
delayed, thus delaying payments to OMJM. He also told them that, if Phase II of 
the project were ever funded, DMJM's continued services would have to be approved 
by A&F. Manzi said they should not expect assistance from him in obtaining that 
approval if DMJM were not up to date on its commitment to him. 

Smith complained that Manzi had not added construction funds for the Holyoke 
project to the Governor's capital outlay budget. Manzi said that OMJM had not 
kept its part of the aeal, and reiterated that he was not going to assist OMJM 
until it did. Finally, Manzi stated that he wanted OMJM to pay him $30,00C to 
$40,000 (instead of $22,000) because he had learnea that the cost of the project 
was going to be much higher than the initial $9 million estimates. Smith told 
Manzi that the construction cost was not going to be as high as he thought, but 
Manzi indicated he did not really believe him. Smith suggested that they go up 
to his room and look at the cost estimates which MBM had prepared for the meeting 



the next day. Smith took the documents from his briefcase and explained the 
figures to Manzi. 

According to a document dated July 2, 1970, the entire project was going to 
cost about $23 million to construct. In order to keep the project within a $20 
million budget, DMJM proposed removing one of the buildings ("C" Building) from 
the construction contract, thus reducing the estimated construction cost to 
slightly over $19 million. 104 

Manzi was satisfied that Smith was telling him the truth about the magnitude 
of the project, but he still wanted DMJM to make a larger contribution to him. 
He told Smith and Mountain that he was under constant pressure to raise funds for 
the upcoming campaign. After some negotiation, Manzi, Mountain and Smith agreed 
to increase the contribution from $22,000 to $27,000. Mountain told Manzi that 
it was very difficult to get cash out of the company, and asked if Manzi would 
accept checks rather than cash. Manzi said he wanted only cash. Mountain then 
told Manzi that he would get together cash for a second payment, and personally 

1C5 

deliver it to Manzi in a short time. 

The EEC Meeting on Costs 

The meeting at the EEC on the cost estimates for the Holyoke project took 
place on July 9, 1970. Present were Joseph Glynn of the EEC, Frank Masiello and 
Louis Domian of Masiello 4 Associates, Stanley Smith and Harry Clausen of DMJM, 
and representatives of Holyoke Community College, the Board of Regional Community 
Colleges, MEM, the landscape architecture firm of Currier, Anderson 4 Geda, and 
Jack Ryan, an aide to House Speaker David Bartley. As a result of the 
meeting, certain changes were made in the plans for the new campus which 
increased the estimated construction cost from $19.2 million to $19. A million, 
but still kept it within the $20 million budget. 107 

On that same day, the House Ways and Means Committee reported out its version 
of the capital outlay budget. Item 8071-68 of that bill was an appropriation of 
$23,700,000 for preparation of the site and construction of the new campus for 
Holyoke Community College. 1 The appropriation was for construction of the 
entire campus, not just Phase I, but it matched, almost exactly, DMJM's estimate 
for the total cost of construction for Phase I ($23,670,590). The Senate Ways 
and Means Committee reported out its version of the capital outlay budget on July 
21, 1970. It amended the Holyoke item so that the $23,700,000 was to be used 
only for the construction of Phase I. The Conference Committee on the capital 
outlay budget adopted the Senate's version of the Holyoke item, and the bill was 
enacted on July 29, 1970. Governor Sargent signed the bill into law on August 7, 
1970. 109 



- 36 - 

DM JM ' s continued services for preparation of working plans and specification 
ana construction supervision on Phase I of the Holyoke Community College project 
were recommended by BBC Director waiter Poitrast on September 4, 1970, ana 
approved by A&F Commissioner Charles Shepard on September 17, 1970. 110 

Now that construction funds had been appropriated for the project, it became 
more important to Frank Masiello that he obtain a contract from CMJM ensuring his 
firm's participation in it. He wrote a letter to Smith on August 6, 1970 stating 
that he had not returned the April 10 contract to DMJM because he was unhappy 
with certain provisions of it. Furthermore, he stated that he had not received a 
reply to an earlier letter he had written to Smith about the terms of the 
contract. 111 Smith wrote back to Masiello on August 19, 1970. He said he had 
just returned from Korea to find Masiello's letter waiting for him. (CMJM had an 
office in Seoul, Korea at that time.) He told Masiello that he hao replied to 

his earlier letter ano asked to meet with Masiello in Eoston on August 30 or 31, 

112 
1970. According to Frank Masiello, that meeting with Smith never took 

place. 113 

On September 18, 1970, Kutay sent a letter to Frank Masiello to confirm the 
arrangements made on the Holyoke and Maryland projects in Washington in June. 
The letter stated that certain portions of the work on the Maryland project would 
be assigned to Masiello 4 Associates, and also that Frank Masiello would be paid 
a consulting fee of $750 per month, for a period not to exceed 12 months, for his 
"personal services" on the HoJyoke project. 114 Masiello signed the agreement 
on September 25, 1970, and returned it to Kutay on September 29, 1970. 115 

However, in a private interview with the Commission's staff, Frank Masiello 
stated that the $750 per month consulting fee was actually compensation from OMJM 
for its taking the Maryland project away from his firm. He was told that DMJM 
charged the consulting fee to the Holyoke project to verify the expense to its 
accounting department. 116 

THE SECONO DELIVERY TO MANZI 

Despite the assurances from Barry Mountain that a second payment would be 
made to him soon, Toots Manzi continued his phone calls to Frank and William 
Masiello after the July 8, 1970 meeting. DMJM had still not made a payment to 
Manzi by the end of the summer, so the pressure continued. 

In late September or early October, 1970, Barry Mountain called Frank 
Masiello and said, "I have got something that Manzi has been looking for." 
Mountain asked Masiello if he would be in Worcester on a certain date, and 
Masiello said he would. Mountain told him he would come to Worcester with the 



- 37 - 

payment. Masiello did not tell Manzi that Mountain was coming because he "felt 
that, if Mountain didn't show ... it would look like I was giving another excuse 
to Manzi on DMJM's promises." 

Mountain arrivea at Masiello's office late one afternoon. Masiello testified 
that it was a cola day, so Mountain was wearing a trench coat when he arrived. 
After some small talk, Mountain told Masiello that his briefcase contained $6,000 
in cash for Manzi. He apologized that the money was in five dollar bills. 
Mountain said the money had come from DMJM's office in Seoul, Korea because it 
was difficult to get cash out of the company. He said he felt the small 
denominations allowed CMJM "to get the money into the country without raising any 
eyebrows . " 

Masiello then called Manzi and told him that Mountain was in Worcester with 
"a pleasant surprise for him." Manzi told them to come down to the market. When 
Mountain and Masiello entered the market, Manzi was standing at the end of the 
meat counter near the scales. He asked them to wait for a few minutes while he 
helped a customer. Mountain and Masiello walked around the market while they 
waited; Mountain commented that the market had the best selection of Italian 
foodstuffs he had ever seen. In about five minutes, the three men went into the 
storage area in the back of the market. 

"What in Hell am I Going to Do with Five-Oollar eills?" 

Mountain opened his briefcase and showed Manzi the money. The briefcase was 
a slim, dark attache case with a handle on top and snaps on each side of it. The 
money was banded with bank wrappers. When he saw the denomination, Manzi said, 
"What in hell am I going to do with five-dollar bills?" Mountain explained that 
he had difficulty getting cash out of the company. He said he had not taken time 
to convert the money into larger denominations because he knew Manzi wanted the 
money as soon as possible. Manzi put the money into a brown grocery bag and left 
the bag leaning against a grocery cart in the back room. 

Manzi told Mountain that he was sure that the Governor would appreciate 
receiving the money because his campaign was well under way. Manzi said he hoped 
that DMJM would make an additional payment before the campaign ended, because he 
was under a lot of pressure to raise funds for TV spots, newspaper advertising, 
etc. Mountain again told Manzi that it was difficult to get cash out of the 
firm, but said he would do his best to make a third payment as soon as 
possible. 117 

The second payment to Manzi raised the total amount paid to him by DMJM to 
$11,000. As of late September or early October, 1970, DMJM had received about 
$190,000 in fees from the Commonwealth on the Holyoke Community College 



project. 118 Although it invoiced the state for another $112,600 on October 4, 
197-0, it could not have received that payment before Mountain delivered the 
five-dollar bills to Manzi. Therefore, the $11,000 paid to Manzi by OMJM took 
5.636 of the fees the firm had received on the Holyoke project to that point. 

About a week after Mountain delivered the payment to Manzi, Frank Masiello 
remembers receiving a call either from Albert Manzi or from his brother, William 
Masiello. He was told that the payment delivered by Mountain was actually less 
than $6,000. Masiello called Earry Mountain. Mountain said he knew there was 
$6,000 because he had counted the money himself, and he suggested that they have 
Manzi count the money in front of them next time. 15 The discussion went no 
further after Mountain said he was sure there was $6,000 in the briefcase. 

William Masiello testified before the Special Commission that, some time 

later, Frank Masiello called him into his office and asked him to go down to 

Manzi's market ana help Manzi convert $5,000 in five-dollar bills from OMJM into 

120 

larger denominations. Frank Masiello does not recall that conversation. He 
only remembers learning about his brother's participation in the conversion of 
the five-dollar bills after the fact. 121 

The discrepancy between the amount of money that Mountain said he delivered 
to Manzi ($6,000) and the amount of money that William Masiello remembered 
helping Manzi convert into larger denominations ($5,000) can be explained. There 
is no reason to assume that Manzi had all the five-dollar bills converted. Some 
of the bills could have been spent before William Masiello became involved in the 
transaction, some of them could have been held and not converted at all. Another 
possibility is that Manzi was right when he claimed that the delivery had come up 
short of $6,000. 

William Masiello drove to Manzi's Market and met Toots Manzi there. They 
drove together in Manzi's car to the Milbury branch of the Blackstone Valley 
National Bank (now the Old Colony Bank). Masiello does not recall what Manzi 
said about how he had come into possession of the five-dollar bills. He does 
recall, however, that the money was in bank wrappers with oriental writing on 
them. While Manzi waited in the car, Masiello took the five-dollar bills in to 
one of the bank tellers. The teller used a machine to count the money, then gave 
Masiello $5,000 in larger denominations. Masiello returned to the car and handed 
Manzi an envelope containing the cash. Manzi drove back to the market where 
Masiello returned to his own car and drove away. 

Some time later, Frank Masiello visited the Milbury branch of the Blackstone 
Valley National Bank. An officer of the bank told Frank that his brother, 
William, had come into the bank a few days before with bundles of five-dollar 
bills. The officer asked, "Where on earth did he get all those five-dollar 



- 39 - 

bills?" Frank Masiello said he did not know. 123 

Manzi's Pressure Continues 

The phone calls frcm Manzi to Frank and William Masiello asking for a payment 
from DMJM resumed shortly after the second installment was delivered. Frank 
Masiello testified, "Bill called me auite freauently and told me how Toots was, 
again, pressing him [to get] DMJM to make payments." Frank Masiello could not 
pass the pressure along to DMJM. He said that his contacts with Smith were 
infrequent at this time, and that Mountain was difficult to reach because he 
traveled extensively, so "weeks would go, by [when] it would be virtually 
impossible to get either one of them on the telephone. "^ 

"Oeadbeats" 

In his public testimony before the Commission, William Masiello described one 
particular meeting with Manzi. In October, 1970, the two men met in Governor 
Sargent's campaign headquarters on Park Avenue in Worcester. A number of people 
were in the office stuffing ana addressing envelopes for a Sargent fundraising 
event, so Masiello and Manzi went off in a corner and had a private 
conversation. Manzi told Masiello that the two firms which his brother, Frank, 
had brought to Manzi — MEM and OMJM — were deadbeats; they hadn't fulfilled 
their parts of the commitments they made to Manzi in order to acquire contracts. 
Manzi inaicated that both firms had paid him some money, but had fallen behind in 
their payments to him. He said he was holding Frank Masiello responsibible for 
DMJM's and MEM's failure to make payments to him. 

After the conversation, William Masiello called Frank in Florida. He told 
him what Manzi had said. Frank replied that he had paid money to Manzi for the 
Joseph Gentile School contract, then the contract was cancelled. *- J It was 
because of that bad experience with the Gentile project that Masiello had 
insisted that DMJM make payments to Manzi only as it received fees from the 
Commonwealth. Manzi 's pressure did not bring about another payment from DMJM 
during the remainder of 1970 or most of 1971. 

By December, 1970, the design of the project had progressed far enough for 
DMJM to construct a model of the project. The plans for the first construction 
contract (EJ 68-2 #1) were nearing completion, and the preliminary plans for the 
second contract (EJ 68-2 #2) had been approved by the EBC. Stanley Smith sent 
photographs of the model to HCC President George Frost, Speaker of the House 
Oavid Bartley, Lieutenant Governor-Elect Donald Dwight, and BRCC Presiaent 
William Dwyer. 126 



- 40 - 

Frank Masiello purchased a table of tickets for a Big Brothers fundraising 
dinner held in Washington, O.C. on December 10, 1970. The ten tickets ccst 
$2,000. Among the guests Masiello invited to the dinner were Barry Mountain of 
CMJM and Anthony Mansueto of MEM. 127 After the dinner, Mountain and Masiello 
changed from formal clothes into street clothes and went to a bar not far from 
the Sheraton Hotel where the dinner had been held. There they discussed the 
Holyoke project. Mountain told Masiello that he and Smith were preparing a 
contract proposal, including a specific fee for Masiello & Associates' work on 
the project. He was hopeful that Smith would resolve the contract dispute after 
he returned from a trip overseas. 

Masiello then told Mountain that he and his brother were getting a lot of 
pressure from Manzi for CMJM to make another payment tc him, and reminded 
Mountain of his promise to Manzi that he would make a third payment very soon. 
Mountain said that it would be easier to make a payment soon if Manzi would 
accept a check. Masiello said, "Manzi doesn't want checks, he wants cash." He 
asked Mountain to please make another payment to Manzi. Mountain said he should 
be able to do so very shortly. Masiello reminded Mountain, as a parting thought, 
that his firm had gone for 2-1/2 years without a contract for the Holyoke 
project. He said he wanted to resolve that issue soon. 

Ouring their conversation at the bar, Mountain informed Masiello that DMJM 
was granting him a leave of absence to work in President Nixon's 1972 re-election 
campaign. 128 

The Project Goes Forward 

Despite Mountain's assurances that Masiello & Associates would soon receive a 
contract with DMJM for the Holyoke project, and that a payment would soon be made 
to Manzi, neither event occurred during the first nine months of 1971. The 
pressure from Manzi on William and Frank Masiello for another payment from DMJM 
continued, as did Frank Masiello's pressure on DMJM for a contract for his firm. 

In March, 1971, Masiello 4 Associates submitted an invoice to DMJM in the 
amount of $5,180 for work performed under "Task Order No. 1." Frank 
Masiello testified that employees of his firm, including himself, had reviewed 
plans, attendea meetings, etc., for DMJM on a per diem basis. Stanley Smith 
wrote back to Masiello in April, 1971 asking for a list of the firm's employees 
and the hours they worked on the project. He also informed the firm that the 
upper limit for payment on the project was $5,000.*'* In May, 1971, Masiello 
told Smith that his firm had still not received $5,000 from DMJM. 132 Later 
correspondence does not mention the $5,000 debt, so it appears that DMJM 
eventually paid Masiello 4 Associates that amount. 



- 41 - 

The first construction contract for the Holyoke Community College project was 
awarded en March 26, 1971. The 0. Federico Company won the site preparation 
contract (EBC contract EJ 68-2 #1) with a bid of $1,333,000, and soon began to 
blast, excavate and grade the rocky site in preparation for construction of 
buildings on it. The landscaping firm of Currier, Anderson 4 Geda supervised the 
project as a consultant to DMJM, instead of Masiello & Associates. The amount of 
ledge removed by the contractor was much greater than expected: by April 1973, 
when the project was finally accepted by the BBC on behalf of the Commonwealth, 
the construction cost had increased to over $1.8 million. DMJM received 
approximately $129,000 in fees and $13,000 in reimbursables on the site work 
contract. *" 

"I am Under a Lot of Pressure from My People" 

On May 13 or 14, 1971, Frank Masiello met with Toots Manzi in Boston. 
Masiello attended a meeting of the Board of Registration in Architecture, and 
received a message from the Secretary of the Board to call Manzi at the State 
House. When he reached Manzi, Manzi asked when he was planning to go to lunch. 
Masiello said he didn't normally eat lunch, but Manzi told Masiello it was 
imperative that they meet, so the two men met at a small luncheonette around the 
corner from the State House. Sandwiches and coffee were served in the front of 
the shop and a small pharmacy was located in the rear. 

Manzi was waiting for Masiello when he arrived. Manzi told him that he was 
Gisturbed about the repeated failure of MBM and 0MJM to make payments to him. He 
said, "I am under a lot of pressure from my people. It is making it sound like I 
can't produce what I say I can, and you are just going to have to get in touch 
with them. You are going to have to impress on them the seriousness of the 
situation." Manzi said he would hold Masiello responsible for both commitments 
if they were not fulfilled by MBM and DMJM. 134 

Masiello attempted to get in touch with Barry Mountain, but learned that he 
was out of the country. He spoke to Stanley Smith who said he would have 
Mountain contact Masiello when he returned. Masiello suggested that Mountain 
contact Manzi directly instead.^ 35 

Failing to hear from Mountain, Masiello wrote a letter to Smith which 
contained the following line: "I would appreciate it very much if you would have 
Earry Mountain get in touch with me regarding the unfinished business we have 
been discussing for several months. 36 He testified that "unfinished 
business" referred to "DMJM's failing to pay Manzi as they had agreed to. " 

On June 3 and a, 1971, Frank and William Masiello met separately with 0MJM 
officials in Washington concerning the Holyoke project. Frank Masiello testified 



- 42 - 

that he met with Smith and yountain at the Hayse-Adams Hotel on the evening of 
June 3. Masiello 4 Associates' expense records indicate that Frank Masiello also 
met with Barry Mountain at the Robin Hood Restaurant in Washington, DC en June u, 
1971. x "° Masiello told the DMJM people that the pressure from Manzi was very 
distracting, but that it would stop if DMJM fulfilled its commitment to Manzi. 
Smith said that he wanted to make sure DMJM would be selected to design Phase II 
of the Holyoke project if funds were appropriated by the Legislature. Masiello 
told him, "If you don't get your skirts cleaned with Manzi, there isn't any way 
Manzi is going to let you continue on with a second design contract.... I am sure 
he will do everything he can to block it." Mountain then said he would go to 
Boston with a payment very shortly, and meet Masiello and Manzi there. Masiello 
said he didn't want to be involved in another payment to Manzi. He stated, "You 
know the way to Massachusetts. You know the way to Manzi's grocery store. You 
can hanale it without any assistance from me or from Bill." 

Masiello initiated a discussion of his firm's role in the Holyoke project. 
He told Mountain and Smith that his firm had gone so long without a contract that 
he was losing interest in the project. He wanted a final resolution of the 
conflict — his firm would either take an active role in the project or get out 
of it entirely. The threat did not work; the subject was dropped without a final 
resolution. Masiello said, "We had a few cocktails together, and everyone 
pretended ... [the discussion] never happened. " i5 

William Masiello testified that he met with Barry Mountain at DMJM's 
Washington office and asked Mountain when he was going to take care of DMJM's 
commitment to Manzi. ° Frank Masiello testified that William Masiello told 
him that he had gotten Mountain (and perhaps Smith as well) to agree to make a 
"substantial payment of money to Manzi in the not so distant future," and to give 
Masiello 4 Associates a contract defining its role in the Holyoke project. 

During the trip to Washington, William and Frank Masiello also apparently met 
with DMJM officials concerning a proposed joint venture to design a U.S. Post 
Office bulk mail facility in Springfield, Massachusetts. Masiello 4 Associates* 
expense records indicate that William Masiello met with Stanley Smith of DMJM and 
Robert Isaacs, Deputy Assistant Postmaster General, on June 3, 1971. That same 
day, William and Frank Masiello also met with Barry Mountain and Robert Isaacs. 

On June 29, 1971, joint venture applications for the Post Office project were 
submitted to the U.S. Army Corps of Engineers and to Robert Isaacs by S. Kenneth 
Johnson of DMJM and Frank Masiello. A3 The submission of that application 
indicates that relations between the two firms, though strained by Masiello 4 
Associates* three years without a contract on the Holyoke project, had not broken 
down completely. In August, 1971, Stanley Smith even proposed that he and Frank 



- 43 - 

Masiello meet to discuss the possibility of jointly pursuing projects in the 



correctional field 



144 



DMJM'S THIRD DELIVERY TO MANZI 

On July 12, 1971 (shortly after the meetings among Frank Masiello, William 
Masiello, Barry Mountain, and Stanley Smith in Washington) William Masiello, 
Barry Mountain, and Toots Manzi met at the Sonesta Hotel at Logan Airport.* 45 
John Wackell, an employee of Masiello 4 Associates, testified that he drove 
William Masiello from Worcester to Boston that day. He and Masiello picked up 
Mountain at Logan Airport. Wackell then dropped off Masiello and Mountain at a 
hotel near the airport, he testified, and returned to Worcester. 46 



The California Cashier's Checks 

Evidence before the Commission suggests that a third payment was made by DMJM 
to Manzi at that meeting. On June 28, 1971 — about two weeks before the meeting 
at the airport — three cashier's checks were purchased at a branch (#314) of the 
Crocker Citizens National Bank at 3265 wilshire Boulevard in Los Angeles. At 
that time, DMJM ' s main office was at 3325 wilshire Boulevard in Los Angeles. The 
checks were drawn in the amounts of $2,000, $1,500, and $1,500, and made payable 
to the Sargent Reception Committee. 48 

On September 14, 1971, the checks were deposited into an account of the 
Sargent Reception Committee at the Guaranty Bank 4 Trust Company in Worcester 
(account number 4-338-1359) .* 49 According to Paul A. Hogan, the Treasurer of 
the Sargent Reception Committee, that account was controlled by Toots Manzi. 
Hogan testified that his job was to pick up from Manzi the checks and cash to be 
deposited and to prepare the deposit slip. He also prepared the contribution 
report reauired to be filed with the Secretary of the Commonwealth. When a 
cashier's check was included in the deposit, Manzi gave Hogan the name or names 
of the contributor(s) . 15 ° 

The contributions deposited on September 14, 1971 were reported to the 
Secretary's office in the names of the following individuals: Edmund DelPrete, 
Anthony Tomasiello, Arthur Manzi, Charles W. Robinson, Anthony Penney, and three 
persons named Ames, Berry, and Sykes.* 5 * 

Several of those individuals testified before the Special Commission. Edmund 
DelPrete was credited with a $1,000 contribution. He testified that he made a 
small contribution, less than $1,000, to the Sargent Reception Committee, but not 
through Victor Zuchero. He did not make a contribution in the form of a 
cashier's check issued by a California bank.* 52 



- 44 - 

Anthony Tomasiello was also credited with a $1,0C0 contribution to the 
Sargent Reception Committee. He said he cashed a $1,000 personal check, ana used 
the cash to purchase ten tickets to the reception from Toots Manzi. However, no 
cash was deposited into the account in Tomasiello ' s name.-" Only $85 in cash 
was deposited into the account in its entire history, and none that day. 5A 

Charles Robinson testified that he never made a contribution to the Sargent 
Reception Committee in the form of a cashier's check issued by a California bank, 
even though he was listed as making such a contribution to the Committee. >5 
In fact, his attorney, Samuel Berman contributed $500, using Robinson's name. 

Anthony Penney testified that he made a $200 cash contribution to Albert 
Manzi for the Sargent Reception Committee, but no cash was deposited into the 
account in his name. He was credited with a $200 contribution that was reported 
as part of one of the California cashier's checks. 

None of the five individuals who appeared before the Special Commission made 
the contributions which the Sargent Reception Committee reported they had made. 
In each case, they did make cash contributions which were neither deposited in 
the Worcester bank account nor reported by the Committee. 

On September 17, 1971, the House ways and Means Committee reported out its 
version of the capital outlay budget. No appropriations for Holyoke Community 
College had appeared in the Governor's proposed budget, but the House added to it 
two items for Holyoke: $5 million for construction of the fine arts and 
administration building (the **C" building which had been removed from the main 
construction contract); and $1 million for preparation of plans and 
specifications for Phase II of the project. The capital outlay budget, including 
the two appropriations for Holyoke Community College, was enacted by the House 
and Senate on October 13, 1971. The bill was signed into law by Governor Sargent 
on November 3, 1971. 157 

Masiello's Continuing Contract Dispute with OMJM 

At the same time that the capital outlay budget was working its way through 
the legislature, OMJM sent Frank Masiello a proposed contract for his firm's 
services on the Holyoke project. The agreement, dated October 7, 1971, would 
have paid Masiello & Associates $62,000 for construction supervision on contract 
EJ 68-2 #2 (A, S, 0, £ and F buildings). 158 

When he read the contract, Frank Masiello noticed that some of its terms 
differed from the verbal agreements he felt he had reached with DMJM. The 
construction of the five buildings at Holyoke Community College was expected to 
take about 18 months. Frank Masiello had expected his firm to be offered $90,000 
to $105,000 for supervising that construction, not $62,000. 159 William 



- 45 - 

Masiello testified that he had expected the firm to be offered $240,000 for those 
services. ° — 

Frank Masiello felt that DMJM had reducea the offer to $62,000 by deaucting 
from Masiello 4 Associates' fees the $11,000 which he had helpea DMJM pay to 
Manzi, as well as the $9,000 consulting fee charged to the Holyoke project (which 
was really for the Maryland job). Masiello called Smith and had a "heated" 
discussion with him. Smith at first denied that those items had been deducted 
from the offer, then said they should meet to talk about it. They arranged to 
meet at a convention of the Society of American Registered Architects (SARA) in 
Miami, Florida, in November. 

Kussman Reviews the Contract for Masiello 

Frank Masiello was concerned about the terms of the proposed contract with 
OMJM. He testified, "I thought the best way to handle this would be to ask other 
people that would be knowledgeable about this contract to review it for me and 
let me have their comments." He sent a copy of the contract to his brother in 
Worcester, along with a memorandum asking him to have several individuals review 
the contract: Louis Domian, Joseph Gildor, and John Wackell, all employees of 
Masiello 4 Associates; Donald Feldman, the corporate attorney; and Frederick 
Kussman, an official of the B6C. 

Frank Masiello instructed William Masiello to "on the QT review it with 
Freddie Cushman [sic]." Frank Masiello testified before the Commission that he 
was referring to Frederick Kussman of the EBC. His concern was not to "obligate 
our firm to anything that went beyond the scope of the contract that DMJM had 
entered into with the Commonwealth.... I suggested to Bill [that] he ask Fred 
Kussman if he would be good enough as a favor to review the contract ... and to 
compare the DMJM contract with Masiello 4 Associates [to DMJM's] state 
contract." He instructed William Masiello to speak to Kussman "on the QT" 
because, he testified, he "knew by this time that the DMJM people had become 
extremely close to other officials in the BBC, and I didn't want to draw any ... 
attention to the fact that Fred Kussman was looking over our contract." Masiello 
described the request as an unusual one, made possible by Kussman's friendship 
with William Masiello and himself. ^ 6 ^ William Masiello did not view the 
request (that Kussman review the proposed contract) as an unusual one. In a 
Commission interview, he said, "It wouldn't be an unusual act for me to go to 
Kussman to review something of this nature prior to our entering into a 
contract. I could get Kussman in or out of his office in five minutes . nJ -°* 

The consultant contract between DMJM and Masiello 4 Associates would have to 
be approved by the BBC once it had been executed by the two firms. In 1971, 



- 46 - 

Kussman's official resDonsibiiities at the SEC included review of contracts which 
were to be approved by the BBC Director. Therefore, for him to participate in 
negotiations between two firms concerning a consultant contract on a ESC job may 
have constituted a conflict of interest. 

William Masiello testified that he had Kussman review the contract, although 
not necessarily as a result of the memo from Frank Masiello. 63 In the files 
of Masiello 4 Associates, the Commission found a four-page analysis of the 
contract in what appears to be Kussman's handwriting; as well as three, slightly 
different, typewritten versions of the same analysis. Kussman suggested 
amendments to the contract between DMJM and Masielld 4 Associates, including the 
following: (1) raise Masiello 4 Associates' basic fee above $62,000; (2) make 
provisions to increase the fee in proportion to change orders approved during the 
construction of the project; and (3) define Masiello 4 Associates' 
responsibilities more clearly. * 6A 

Frank Masiello met with William Masiello and Fred Kussman in his Miami hotel 
room during the SARA convention. They reviewed Kussman's comments on the 
contract, which had been typed up for Frank Masiello's use. Kussman told him 
that the DMJM proposal was "reasonably fair... and generally followed ... the 
contract that the Bureau had with DMJM." The major problem with the proposal, as 
far as Kussman was concerned, was that DMJM had offered Masiello 4 Associates too 
little money for its services. 66 

William Masiello testified that he gave Anthony Mansueto of MBM a copy of the 
proposed contract during the convention. 67 Frank Masiello had earlier sent 
Mansueto a copy of the contract to review. Frank Masiello received a letter from 
Mansueto, dated November 15, 1971, which contained Mansueto's views on the 
proposal. He said he thought $120,000 would be a more reasonable fee than 
$62,000 for the work involved. He also suggested that Masiello 4 Associates 
amenc the contract to base its fee on a percentage of the construction cost of 
the project, rather than accept a lump-sum fee. 68 

Masiello's Further Negotiations with DMJM 

Stanley Smith was a speaker at the SARA convention. One evening, he had 
dinner with Frank Masiello to discuss the Holyoke project. Smith admitted that 
he was trying to deduct the payments to Manzi from Masiello 4 Associates' fee. 
Masiello was — his firm still did not have a satisfactory contract on the 
project. He told Smith "We had been jerked around from one side of the country 
to the other.... I had never been put in this position without having been kissed 
first." He told Smith that both firms had an interest in resolving the dispute: 
(1) Frank Masiello was planning to purch